The results of the second Memphis Economic Indicator, a new survey measuring general business sentiment jointly produced by The Daily News and Dixon Hughes Goodman LLP, reflect a modest overall improvement in optimism among business leaders compared to last quarter’s survey results.
Just how much optimism and improvement in sentiment, though, depends on which aspect of running a business is being considered.
Answers were given based on a scale from 1 to 10, with 1 being “not at all confident” and 10 being “very confident.” Respondents used that scale in considering the coming quarter and whether they expect their businesses to add staff, increase revenue, expand their profit margins, pay more in expenses, and whether they think the overall economic position of both their company and Memphis as a whole will improve.
On the scale of 1 to 10, the average answer was 7 when respondents were asked if they thought their company’s overall economic position will improve in the next quarter. That’s the same average as the survey’s results from last quarter.
“We were very pleased to see the volume and thoughtfulness of responses to the latest Memphis Economic Indicator,” said Dixon Hughes Goodman Regional Managing Partner Anthony Clark. “The data we received shows that the economic recovery in our metropolitan area is still continuing, however modestly.
“Dixon Hughes Goodman is making strategic moves to adapt to the improving local economy. We recently made 10 promotions and have just welcomed eight new hires to our Memphis office and added 12 interns for 2014.”
On average, respondents were unsure if they’d add staff next quarter, but most survey takers on average did say they think their company’s overall economic position will improve. And although CEOs tend to be the direction-setters while CFOs stick to the hard facts of the balance sheet, the new batch of survey results shows that CFOs were on average more optimistic about their company’s prospects for the fourth quarter than were CEOs.
The full results of the survey are available at www.memphiseconomicindicator.com.
This time, the survey also included an open-ended question asking participants what external issues they feel will have the most impact on their businesses’ performance in the coming quarter. Answers ranged from the Affordable Care Act to local taxes to the quality of the local workforce.
Along those lines, Chris Bird, president of Dillard Door & Security Inc., said his company’s health insurance renewal is up 21 percent for the same coverage.
“If I didn’t love my employees so much, I’d send them to the exchange to deal with it themselves,” he said, referring to the state- and federally-run exchanges set up under health care legislation. “We are going to review it again in March.”
Shawn Massey, a partner with The Shopping Center Group LLC, was among those who took the survey and said, from a retail perspective, the economic picture appears fuzzy at the moment.
“Retail brokers are very busy with a select group of expanding quality national and regional tenants,” Massey said. “Very few local tenants are expanding or opening for business. We lack supply of good quality developments. The exception is in areas like Overton Square or Cooper-Young, where a sense of entrepreneurship is strong and we see activity from the local sector. We have not fully recovered, although it is better than 24 months ago.”
Dudley Boyd, president and CEO with National Bankers Trust, also responded. He said National Bankers Trust is not only positioned for growth in the Memphis region but that the company’s decision to spend $6 million building a corporate headquarters here reflects confidence in the region.
“We believe that with a few strategic moves Memphis could become a significant business growth center, attracting both new and established businesses to the region,” Boyd said. “As an example, our NBT Business Capital Center is being designed to bring together smart people and bright ideas to Memphis and connect them with the region’s significant resources, including creative funding solutions from local and regional banks, investors and companies like NBT. We also believe continuing to build on our smart pro-jobs policies of Memphis and Shelby County will definitely promote long term prosperity for everyone in the region.”
Bird added that his company’s receivables are currently up, while collections are down. His hope is that situation is an anomaly and indicative of companies’ broadly hoarding cash by paying late.
To round out the snapshot of the local economy, a variety of metrics compiled by The Daily News’ sister company, Chandler Reports, showed general improvement in the economy and real estate market last quarter compared to one year earlier.
In the third quarter, Shelby County netted 4,686 home sales, up 12 percent from 4,176 in the third quarter of 2012. Banks and mortgage lenders made 2,521 purchase mortgages during the third quarter, up 7 percent from the 2,364 mortgages one year earlier, while homebuilders filed fewer permits in the third quarter.
Don Caylor, president of the West Tennessee Home Builders Association, said the drop from 229 permits in the third quarter of 2012 to 197 permits last quarter reflects the fact that developed lots are scarce, which could lead the builders who own those lots to sit on them for a little longer.
Meanwhile, business licenses in Shelby County are up. In the third quarter, 1,505 business licenses were filed with the Shelby County Clerk’s office, up from 1,435 in the third quarter of 2012. While new business increases, foreclosures are down: there were 865 residential foreclosures last quarter, down from 959 one year earlier.