D&B U.S. Economic Health Tracker | May 2014

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D&B’s Chief Economist Paul Ballew highlights the key findings on U.S. businesses for April 2014, in the May edition of U.S. Economic Health Tracker. The Tracker examines three macro indicator dimensions: the Small Business Health Index (SBHI), U.S. Jobs Health and U.S. Business Health Index .

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D&B U.S. Economic Health Tracker | May 2014

  1. 1. Paul Ballew, Chief Data & Analytic Officer, D&B Tuesday, April 29, 2014 – 8:30AM Economic Briefing Follow us on Twitter @DnBEconomy #DnBEconBrief
  2. 2. Executive summary • D&B’s proprietary measures on business activity continue to send conflicting messages about the US economy • The Small Business Health Index stabilized in the most recent monthly reading but a stronger recovery was expected with the improvement in weather across the country • On the employment front D&B continues to assess a gradual improvement with payrolls projected to grow in excess of 200,000 this month • D&B’s Economic Health Tracker continues to flash positive signals regarding the financial health of the private sector across most verticals and geographies 2#DnBEconBrief
  3. 3. Small Business Health Index • The Small Business Health Index stabilized in the current month following a number of months of erosion • The indices for major industries show no significant movements • There are areas of improvement, like improved payment performance, but overall most activity stabilized in the current month 3#DnBEconBrief
  4. 4. SBHI: Revisiting the past year by industry… • The performance of the major industries have been tepid starting in the final quarter of 2013 • Some weather-sensitive sectors like Construction and Real Estate remain historically below average, but all sectors seem to similarly affected by the recent bout of harsh weather 4 70.0 80.0 90.0 100.0 110.0 120.0 Small Business Health Index by Sector: The past year Overall Retail Construction Business Services Real Estate
  5. 5. ...and geography • While most top-performing MSAs show modest improvements in the past year, the performance of the slowest ones have plunged 5 80.0 100.0 120.0 140.0 160.0 180.0 200.0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Small Business Health Index: Top performing MSAs Miami, FL Atlanta, GA Nshvlle-Dvdson, TN San Antonio, TX 60.0 70.0 80.0 90.0 100.0 110.0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Small Business Health Index: Slowest Performing MSAs Chicago, IL Phoenix, AZ Salt Lk City-Ogden, UT Richmond, VA
  6. 6. On the brighter side, the recent erosion in payment performances seems to be stabilizing • The increase in dollar delinquencies that have caused some concern during the recent months have fallen back to their pre-winter levels this month 6 2.5% 2.7% 2.9% 3.1% 3.3% 3.5% 3.7% 3.9% Small Business Dollar Delinquencies Percent Dollars 91+ Days Past Due Source: D&B Proprietary Data
  7. 7. Availability of credit to small businesses is improving… • Small Businesses are resorting to more conventional avenues of credit and decreasing credit card usage Source: Job Openings and Labor Turnover Survey, (BLS), Haver Analytics and D&B Proprietary Data 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Trend: Number of Loan Accounts Private Sector Job Openings, thousands (Left) D&B Proprietary Number of Loan Accounts, thousands (2 quarters prior, Right) $17,400 $17,600 $17,800 $18,000 $18,200 $18,400 $18,600 $18,800 $19,000 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 Trend: Credit Card Current Balances S&P US Private Label Credit Cards, Outstanding Balance, $M (Left) D&B Proprietary Credit Card Current Balances, $M (4 quarters prior, Right)
  8. 8. The Small Business Administration reports increases in amounts of loan approval and a reduction in charge off amounts for U.S. small businesses 8#DnBEconBrief $0 $5,000,000,000 $10,000,000,000 $15,000,000,000 $20,000,000,000 $25,000,000,000 $30,000,000,000 $35,000,000,000 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 SmallBusinessLoanApprovalAmount($) Source: The U.S. Small Business Administration 7(A) regular Total --All types of loans $0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 SmallBusinessChargeOffAmounts($) Source: The U.S. Small Business Administration 7(A) regular Total --All types of loans
  9. 9. … and charge-off rates have plunged 9 0.0% 0.4% 0.8% 1.2% 1.6% 2.0% 0.0% 1.0% 2.0% 3.0% Charge-off rate on Business Loans All Business Loans, Federal Reserve Board Small Business Loans, D&B database 0.00% 0.40% 0.80% 1.20% 1.60% Charge-off Rate on Credit Card Loans • Charge-off rates on all small business loans have declined significantly in the past few years
  10. 10. U.S. Jobs Health 10#DnBEconBrief • D&B expects 208,000 jobs to be added to Nonfarm Payroll • Manufacturing and Business Services feature the major gains • Retail begins to strengthen while Real Estate features losses this month
  11. 11. Nonfarm Payroll Employment saw severe declines during the last recession… 11#DnBEconBrief -8,000 -7,000 -6,000 -5,000 -4,000 -3,000 -2,000 -1,000 0 Totalnonfarmemployees,ThousandsSA Source: Bureau of Labor Statistics Nov 1948-Oct 1949 Jul 1953-May 1954 Aug 1957-Apr 1958 Apr 1960-Feb 1961 Dec 1969-Nov 1970 Nov 1973-Mar 1975 Jan 1980-Jul 1980 Jul 1981-Nov 1982 Jul 1990-Mar 1991 Mar 2001-Nov 2001 Dec 2007-Jun 2009 Over seven million jobs were lost from the start of the recession to the end—more than the prior four recessions combined
  12. 12. ... but a bounce back may be underway 12#DnBEconBrief March 2014 marked a significant turning point in the labor market. All private nonfarm jobs that were lost since the beginning of the financial crisis were gained back -10000 -9000 -8000 -7000 -6000 -5000 -4000 -3000 -2000 -1000 0 1000 Dec-2007 Feb-2008 Apr-2008 Jun-2008 Aug-2008 Oct-2008 Dec-2008 Feb-2009 Apr-2009 Jun-2009 Aug-2009 Oct-2009 Dec-2009 Feb-2010 Apr-2010 Jun-2010 Aug-2010 Oct-2010 Dec-2010 Feb-2011 Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-2011 Feb-2012 Apr-2012 Jun-2012 Aug-2012 Oct-2012 Dec-2012 Feb-2013 Apr-2013 Jun-2013 Aug-2013 Oct-2013 Dec-2013 Feb-2014 Source: Bureau of Labor Statistics Cumulative Change in Total Private Employment (SA, Thous)
  13. 13. U.S. Business Health Index • The overall US Business Health Index continued its upward trend in April to reach 53.7%. The index recorded its seventh-consecutive sequential increase. Once again reaching the highest level since the inception of the report in December 2010. • Strong growth was recorded across the board while small businesses and separately business services notably accelerated in April 13#DnBEconBrief
  14. 14. • On a year-over-year basis the overall index rose 8.6 percent, accelerating from the previous month to reach its fastest pace since the report began in December 2010. • The viability component continued to lift the overall index recording double digit year-over-year growth. In addition to viability the total loss predictor surged in April—signaling extreme risk has improved markedly from a year ago. U.S. Business Health Index 14#DnBEconBrief -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Y/YPercentageChg. Note: Delinquency rates and the Total Loss Predictor are inverted to capture the effects that lower rates will raise the overall score. Overall Viability Delinquency Total Loss Predictor
  15. 15. What’s happening among small businesses? 15#DnBEconBrief • Small businesses’ balance sheets are stronger then compared to the past five years, they are improving at an increasing pace and “catching up” to their larger counterparts. -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 38 40 42 44 46 48 50 52 54 Y/YPercentageChg. (Small Class) Employment < 100 (Primary axis) (Small Class) Employment < 100 (Secondary axis) 0 Difference (Overall Business Health Index--Large Companies Minus Small)
  16. 16. Summary 16#DnBEconBrief • The Small Business Health Index stabilized this month with its value standing at 91.5 points. A stronger bounce back was expected and D&B will continue to examine the tepid improvement • D&B expects some improvements in the Employment situation with some sectors like Retail picking up pace again • The Overall Business Health Index continued to gather strength in April. As the U.S. economy continues to heal after the “great recession” business risk continues to move further into a low risk environment.
  17. 17. Follow us on Twitter for up to the minute information and analysis 17 For more information, visit www.dnb.com/tracker And follow the conversation on Twitter at @DnBEconomy #DnBEconBrief

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