The Tatum Survey of Business Conditions February 2014

Sam Norwood

Executive Summary - Monthly Highlights

• Strong January business conditions with respondents having a positive outlook for the next 60 days

• New orders have increased, driving up order backlogs and suggesting an improved first quarter 2014

• After slumping in December, capital expenditure commitments are rising modestly

• Firms did more hiring in January than December, but the outlook for the next 60 days is mixed

• Financing conditions/capital availability are a concern. Driving these concerns are tightening by the Federal Reserve and the prospect for higher interest rates.

The Tatum Index of Business Conditions
The Tatum Index is indicating significant improvement in economic activity compared to the slump of November-December. The index is supported by all other indicators except the availability and cost of capital.

Order Backlogs
Order backlogs reflect orders on hand for future delivery for many companies. The past month continues an upward trend, offering further confirmation that new orders are expected to continue flowing in faster than near term deliveries.

Capital Expenditure Commitments
Now that companies have completed installations for year-end, the focus is shifting to new projects that will drive growth through 2014.

The outlook for employment is somewhat soft in an otherwise broadly improving view of business conditions.

Capital Availability and Pricing
Our respondents are saying raising capital is going to get tougher and more expensive. This is contrary to the early stage “credit thaw” recently cited by our bank regulators.

We hope you found Tatum's Commentary interesting and useful. We welcome your comments and questions. Click the link below to view the complete report: February 2014 Tatum Survey of Business Conditions

Sam Norwood 
Senior Partner 

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