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

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

  • Paul Ballew, Chief Data & Analytic Officer, D&B Tuesday, April 29, 2014 – 8:30AM Economic Briefing Follow us on Twitter @DnBEconomy #DnBEconBrief
  • 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
  • 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
  • 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
  • ...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
  • 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
  • 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)
  • 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
  • … 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
  • 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
  • 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
  • ... 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)
  • 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
  • • 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
  • 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)
  • 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.
  • 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