As they have for a few quarters now, Memphis-area business leaders continue to acknowledge an incremental sense of optimism about specific aspects of their companies and the economy, according to the results of the third Memphis Economic Indicator.
The indicator is a survey measuring general business sentiment that’s a joint product of The Daily News and Dixon Hughes Goodman LLP. Combined with objective data and reports compiled by The Daily News each quarter, the result is an attempt to paint a comprehensive picture of the local economic landscape that looks at more than anecdotes alone or only a set of numbers.
Respondents are quizzed on a handful of business and economic outcomes. On average, for example, respondents to the latest survey reported they were slightly confident that they’d add staff next quarter, while most survey takers on average also said they think their company’s overall economic position will improve in the next quarter.
The survey answers are given based on a scale from 1 to 10, with 1 being “not at all confident” and 10 being “very confident.” Respondents use that scale to convey whether they expect their businesses to add staff, increase revenue, expand profit margins and pay more in expenses in the coming quarter, as well as whether the individual respondents 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 previous survey’s results.
The full results of the survey are available at www.memphiseconomicindicator.com.
“I feel the local economy is improving,” said Mott Ford, CEO of Commercial Bank and Trust, who was one of the survey-takers this quarter. “In general, people are starting to spend money again. While I would not classify my feelings as bullish, I don’t see as much bearish sentiment with regards to the local economy. There are still challenges, but I think people are feeling better at the beginning of 2014 than they did at the beginning of 2013.”
On the flip side, Neurology Clinic administrator Chip Harris, another of the survey-takers, said he thinks that when it comes to the local economy, Memphis city leaders have tended to kick the can down the road. And when it comes to his industry, a variety of external factors are continuing to exert new pressures.
“I feel the politicians have postponed making hard financial decisions on matters such as retirement funding and employment levels appropriate for public services,” Harris said of Memphis leaders. “These will only be passed on to business and home owners in the form of additional taxes sometime in the future.
“On the medical economy, we are continuously facing cuts from Medicare and private insurance companies each year, while overhead expenses have no such barriers to increases. The uncertainty of the effects of the Affordable Care Act adds to the inability to make any budget assumptions or strategic planning. In the future, I wonder who will make a career choice of medicine when it is so costly and the continued diminishing return in private practice.”
Meanwhile, David Savage, president of Savage Construction Co., said that he’s seen strong improvement in the local construction economy since the middle of 2013. His company specializes in medical and dental offices, segments that are in demand for his company.
Marvin Stockwell, communications director for the Church Health Center, was similarly upbeat.
“I am optimistic about the Memphis economy because I see so many people and organizations stepping forward to make great things happen in our city,” Stockwell said.” It’s an exciting time to work at the Church Health Center with our move to Crosstown now a palpable reality. What the project will do for that neighborhood and our city is as exciting as how it will help us at the center continue our mission of love and service to more people in our community.”
To round out the current snapshot of the local economy, a variety of metrics complied by The Daily News’ sister company Chandler Reports showed improvement in some areas of the economy and real estate market.
Shelby County home sales slowed in the fourth quarter, for example, but the average price and sales volume were both up over the fourth quarter of 2012, according to Chandler. The average sales price of a home in the fourth quarter was $140,586, up 15 percent from $122,571 in the same period in 2012. Total sales volume in the quarter was $505.8 million, up 10 percent from $460.8 million in the fourth quarter of 2012.
Between October and December, total purchase mortgage volume rose 7 percent to almost $320 million compared with almost $298 million in the year-ago period. And the average mortgage amount in the fourth quarter of 2013 was $166,486, up 7.6 percent from the $154,666 during the same period of 2012.
Homebuilders didn’t file as many permits in the fourth quarter – a 22.2 percent decrease over the fourth quarter of 2012 – but foreclosures also fell 19 percent in the fourth quarter of 2013, compared with the year-ago period.
Overall, 751 foreclosures were filed in the fourth quarter, down from 923 in fourth quarter 2012.
Chandler Reports is a division of The Daily News Publishing Co. Inc.