The inaugural Memphis Economic Indicator, a new online survey launched by Dixon Hughes Goodman LLP and The Daily News to measure general business sentiment, shows little consensus about the local economy.
While respondents leaned negative in some of the answers, such as whether they expected their businesses to add staff next quarter, most respondents generally leaned positive when asked if they felt their company’s economic position would improve next quarter.
The results of The Daily News' first quarterly economic survey measuring business sentiment shows how 118 respondents answered the six-question online survey, sharing their thoughts on the coming quarter.
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, widen profit margins, see expenses rise, and whether they think the overall economic position of both their company and Memphis as a whole will improve.
A website for the product is live at www.memphiseconomicindicator.com, and the results of the first survey are there.
Answers to the question about whether respondents expected their businesses to increase staff next quarter were more binary than some of the other responses. Most respondents – 19.5 percent – said they’re “not at all confident” they’ll add staff next quarter. However, the next largest group of responses to that question – 14.4 percent – said they were very confident they would add staff. And about 13.6 percent said they were unsure if they’d add staff.
For the rest of the survey, the largest groups of answers tended to range from unsure to leaning positive. Most of the answers were between 5 and 8 for whether respondents expected their business to increase its profit margin – reflecting a range from uncertainty to somewhat positive.
For whether respondents expected their expenses to go up next quarter, it was the same range.
Lori Turner-Wilson, founder and CEO of RedRover Sales & Marketing, was among those who took the survey and said looking at the next quarter, she has high confidence in the regional economy.
“Besides being a small-business owner myself and knowing how much we are investing and growing this year, RedRover’s clientele is predominantly small and mid-sized Memphis-based businesses,” she said. “The services we provide to them are growth-focused, and we’ve seen a substantial uptick in demand for our services this year compared to last.
“Our first six months of 2013 returned a 92 percent improvement compared to the same period last year, which is significant considering 2012 was a banner year for our firm,” she said. “Our phones have been ringing at nearly twice the rate in the second quarter than they did in the first. Our clients’ business results are coming in just as strong this year. I expect this trend to continue in (the third quarter).”
Dawn Rapoport, chief operating officer for Waddell & Associates Inc., was another of the survey-takers. She said that short-term economic and political cycles will always have some volatility and that her firm still believes there’s no shortage of compelling investment opportunities.
“I would say we feel cautiously optimistic about the direction of certain fundamentals in the economy,” Rapoport said. “There are signs of recovery in job growth, the housing market, consumer confidence and some corporate earnings.
“However, it remains to be seen what specific actions the Fed will take, and how this will influence key economic drivers as we go into the second half of the year. For us, we work to understand how these factors impact stock market valuations, and going into the third quarter we feel U.S valuations are still within a reasonable range.”
Other economic inputs to consider include metrics compiled by The Daily News’ sister company Chandler Reports, which show the real estate market, on balance, looking stronger than last year.
In the second quarter, for example, Shelby County netted 4,226 home sales, up 11 percent from 3,821 in the second quarter of 2012.
Also according to Chandler, banks and mortgage lenders made 2,233 purchase mortgages during the second quarter, up 3.7 percent from the 2,150 mortgages during the year-ago period. However, homebuilders pulled 269 permits in the second quarter – the exact amount they also filed during the second quarter of 2012.
“Many good companies have stabilized from the economic downturn and are poised for growth, assuming two things,” said SEACAP Financial Inc. founding principal Bob King. “One, that their market holds a positive course and demand continues to build for their product or service. And two, they have sufficient availability to growth capital.”
Kate Pera, who books events at a group of restaurants, said she takes a positive view of the local economy, partly because she’s simply seeing more events booked.
“It seems like peoples’ purse strings are getting a little bit looser,” she said.
Anthony Clark, regional managing partner at Dixon Hughes Goodman, said he’s impressed with the first Memphis Economic Indicator survey and looks forward to tracking survey results over the coming quarters.
“These results have given us a strong baseline of knowledge and we’re eager to see how these economic trends develop over subsequent quarters,” Clark said. “The collective input we receive will make the Memphis Economic Indicator one of the most useful and perceptive business intelligence tools serving this region. Dixon Hughes Goodman is privileged to serve as a leader in that effort and we truly appreciate everyone’s participation.”