After striking new historic lows in the first quarter of the year, the team at Kruggel Lawton says the numbers rebounded slightly in the second quarter of 2019 for their Michiana Benchmark Business Index compiled with the help and insight of regional Chief Financial Officers from businesses in the for-profit sector.
Compiled by the certified public accounting and consulting firm of Kruggel Lawton CPAs, the benchmark reflects a bit of a recovery after logging the lowest scores since the index was first launched more than eight years ago.
Kruggel Lawton’s Terry Bush tells us that after hitting an historic bottom in the first quarter of the year, the overall second quarter Benchmark Business Index — or simply BBI — adjusted to a score of 53.01 out of a maximum possible score of 100. That’s a rebound of just over 2-percent from first quarter readings registered by CFOs in the region.
Bush, a Director with Kruggel Lawton CPAs, says, “With continued national economic headlines about trade tensions and tariffs, the direction of interest rates, and tepid economic growth, this quarter’s survey results seem to indicate that our regional economy is treading water, with at least one positive indicator.”
That one key positive is reflected in the area of profitability. Bush says, “The Profitability metric increased over six-percent from the first quarter, reflecting an increase in for-profit companies’ bottom lines compared to the second quarter in 2018. In addition, and as usual, chief financial officers’ perception of the outlook for their company is the strongest of the four metrics, indicating some degree of optimism on the part of CFOs.”
Kruggel Lawton conducts this confidential survey of CFOs in for-profit companies in the South Bend/Elkhart region on a quarterly basis. The survey tracks changes in companies’ revenue, profitability, and employment levels compared to the same quarter of the prior year, along with CFOs’ perception of the business outlook for their companies.
Bush tells me, “I believe the most prominent topic lately among companies (for-profit only) in our region who participate in our quarterly CFO survey is workforce related. In some manufacturing sectors experiencing weaker customer demand, employers have been getting creative with scheduling, for example, longer summer shutdowns and shortened workweeks/schedules in order to keep their employees and avoid resorting to layoffs.” He notes, “I don’t perceive this is across the board, since hiring activity in health care, construction, and professional services seems to be still strong. I perceive that specialized health care, skilled trades, and professional/technical positions requiring prior experience all continue to be difficult to feel.”
Bush goes on to say, “The other – and more macro – issue that continues to grind on is tariffs and trade tensions. This puts pressure on supply chains and demand for large and small companies alike, with additional uncertainty for agribusiness, which along with the weather has been a bit trying for some producers in Michigan’s Great Southwest.” Nevertheless, he notes, “I still feel encouraged about the level of optimism of CFOs in for-profit companies in our region. This consistently outpaces actual results reported by CFOs for their companies’ profits, headcount, and revenues. Unlike the recent Business Leaders for Michigan survey, we don’t put a timeframe on the outlook metric for our survey, so our report may be more short-term or ‘here-and-now’ in nature.”
Participating CFOs’ input on these four metrics is combined into the overall Benchmark Business Index to provide a barometer of the Michiana-area business climate.
Noteworthy second quarter survey results include:
- In a reversal from the first quarter, all four metrics that comprise the Index – Revenue, Profitability, Employment, and CFO Outlook – increased…
- The Revenue and CFO Outlook metrics barely increased: only 10-percent and .88 percent respectively…
- The Profitability and Employment metrics increased 6.25 percent and 2.30 percent respectively…
With offices in St. Joseph here in Michigan, and South Bend and Elkhart, Indiana, as well as in Knoxville, Tennessee, Kruggel Lawton CPAs is a full-service accounting and business consulting firm offering assurance services, tax consulting, estate planning, business valuation, and business accounting services. Kruggel Lawton also has national and international capabilities as an independent member of the BDO Alliance USA. Learn more at www.klcpas.com.
If you are a CFO in a Michiana area for-profit organization and would like to participate in the Kruggel Lawton quarterly survey, you are welcome to contact Terry Bush at tbush@klcpas.com or by calling 574-289-4011, ext. 205.
