Tatum Survey of Business Conditions Explores Impact of Rising Interest Rates
- Executive Survey Reveals How Companies Plan to Respond to a Range of Changing Economic Factors in the Near Future -
ATLANTA, April 13, 2015 -- Tatum, a leading professional and interim services firm offering hands-on strategic, financial and technology solutions that measurably improve business performance, today announced the results of its first quarter Survey of Business Conditions, a high-level executive survey based on the opinions of Tatum's chief financial officer (CFO) partners and external CFOs.
Among the highlights of the survey, Tatum asked respondents about the likelihood of the Federal Reserve raising interest rates up to 3.125 percent by the end of 2017, with 54 percent of Tatum partners saying it is likely, and an even greater number of external CFOs (71 percent) in agreement. The survey also asked about the impact such a move would have on financial management strategies, capital structure, business investment levels and cash investment management. Results show that the rising rate environment will likely cause some companies to accelerate capital investments, while others may dial back on longer pay-back projects. Similarly, some companies expect to expand debt levels to take advantage of better rates and availability, while others will replace debt with equity or reduce their debt levels. Still, the majority of CFOs foresee no change to their pricing structure and cash investment management (67 percent and 71 percent, respectively).
The Tatum Survey of Business Conditions also asked participants to reflect on trends over the past 30 days and share their predictions and projected business outcomes for the next 60 days. CFOs from Tatum's partner network and external organizations alike report improved business conditions over the previous month. Moreover, given that sales and order backlogs grew throughout March and headcounts expanded across many companies, the forward outlook remains positive. Overall, 46 percent of Tatum partners and 47 percent of external CFOs expect that business conditions will improve over the next 60 days.
The survey also revisited questions from its first quarter survey of 2014 to reveal how the view on financing conditions has changed year over year. Overall, Tatum partners and external CFOs agree that companies are now operating in a more favorable borrowing climate as compared to the previous year. The majority of respondents agree that credit availability is adequate, their organizations can obtain financing at competitive interest rates and lending terms are appropriate. Meanwhile, survey respondents show less agreement when asked if lenders and underwriting policies and practices are less restrictive today.
The survey results also form the basis of Tatum's monthly Index of Business Conditions. The Index is an average of the ratio of Tatum partners who report improvement compared to those who report a worsening of business conditions over the previous 30 days and for the next 60 days. Based on these findings, Tatum reports moderate growth in March and a positive outlook for the next two months.
"Tatum remains at the forefront of the financial landscape, identifying the biggest trends, challenges and opportunities impacting financial leaders across all industries," said Suzanne Donner, managing partner, Knowledge Management for Tatum. "Through our quarterly survey, we can take a look inside the minds of Tatum's CFO partners and external CFOs to understand their predictions and concerns for the months ahead. As the monthly Tatum Index of Business Conditions and our first quarter survey show, many organizations saw moderate growth since the beginning of the year. However, our respondents expect more positive future outcomes alongside the anticipated rise in interest rates."
Tatum has made its first quarter 2015 Survey of Business Conditions report available for download at: http://www.tatum-us.com/knowledge-center/thought-leadership/survey-of-business-conditions/.
About the Tatum Survey of Business Conditions
The Tatum Survey of Business Conditions is conducted each month to discover how Tatum's network of financial executives and consulting professionals, representing a range of industries, gauge the business climate, focusing on trends over the past 30 days and expectations for the upcoming 60 days. Tatum aggregates the views of those professionals, including chief financial officers, controllers and chief information officers, to construct the monthly Tatum Index of Business Conditions. Widely considered a leading source of insight for how market conditions impact companies and their future strategies, third-party validators recently found the Tatum Index to be a significant predictor of future business conditions and highly correlated with future real business activity in the U.S. To learn more, please visit: http://www.tatum-us.com/knowledge-center/thought-leadership/survey-of-business-conditions/.
Tatum is a leading professional and interim services firm offering hands-on strategic, financial and technology solutions that measurably improve business performance. Tatum's executive leaders and consultants help companies navigate critical points in the business lifecycle and execute their strategic initiatives. Our deep management and operational expertise, keen strategic consultancy and a focus on follow-through enable our teams to deliver solutions that drive sustainable impact. With a national footprint of offices in key markets, our firm is ready to mobilize locally anywhere in the country. Tatum is an operating company of Randstad US.
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