Is business slowing down?

Is business slowing down? A handful of leading indicators may warrant concern.

A theme I’ve heard repeated in many different business conversations is that business is slowing down. Customers aren’t buying as much. Executives aren’t signing contracts. Sales prospects are stalling in the pipeline. Are there economic indicators which could explain this phenomenon? Or are these just anecdotes without a basis in data?

Three leading economic indicators worth paying attention to are the Baltic Dry Index (BDI), Initial Jobless Claims, and the Producer Price Index (PPI). These leading indicators can hint of troubles to come.

BDI tells us the price of shipping containers. If the price goes up, more companies are competing for shipping space. In turn, that means companies are producing more. As a rule, companies don’t buy shipping space speculatively, only when needed. If the price goes down, companies are shipping less, which also means they’re making less.

Initial Jobless Claims are a consumer leading indicator and a business leading indicator. More people laid off means more companies scaling back jobs.

Finally, PPI tells us how much companies are paying for their raw materials. If prices are going up, companies are making more stuff (and thus competing for commodities needed to make stuff). Conversely, a decrease in PPI means companies are buying less stuff and therefore making less stuff.

Combined, these indicators give a sense of the economy with regard to businesses. If all indicators are moving up, businesses are likely growing. If all indicators are moving down, businesses are uncertain or shrinking.

When we examine these indicators, we look at two lines: resistance and support. These are stock market terms; resistance means the recent top levels of any metric, while support means the recent bottom levels. Technical stock traders use these guidelines to determine whether a given metric’s behavior is anomalous or not.

Let’s take a look at the charts. First, BDI:

Resistance_and_support_-_BDIY_Quote_-_Baltic_Dry_Index_-_Bloomberg_Markets.jpg

Above, we see BDI has fallen through its support level. Already depressed, BDI has gone below support to a 5 year low. Companies are shipping less stuff.

Next, Initial Jobless Claims:

Resistance_and_Support_-_4-Week_Moving_Average_of_Initial_Claims_-_FRED_-_St__Louis_Fed.jpg

We see Initial Jobless Claims have broken through their resistance level, signifying that the overall 5 year trend may be reversing. Companies might be paring back jobs.

Finally, we look at PPI:

Producer_Price_Index_for_All_Commodities_-_FRED_-_St__Louis_Fed.jpg

PPI broke through a multiyear support level last year, but has declined below its 5 year support level at the end of 2015.

Any one of these indicators could be due to interfering environmental conditions. All three indicators show business conditions eroding.

Is business slowing down? In a nutshell: yes.

We must prepare accordingly.

Adjust our expectations for marketing’s ability to generate leads.
Expect a decline sales’ ability to close in shorter-than-average sales cycles.
Plan to increase spend on advertising just to maintain current levels of activity.

Tougher economic conditions mean stepping up our game as marketers.


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Predicting the future of analytics with IBM Watson Analytics

Last year I had the privilege to attend IBM’s Analytics for All event featuring one of my favorite products, Watson Analytics. As one of a dozen IBM Futurists, we were asked for our perspective on analytics trends. Here’s what Valdis Krebs and I shared:

My prediction about machine to machine communication lacked one critical point. To cope with our new flood of data, we also need the help of machines. We can’t process the data we have now as humans, much less future volumes of data. Innovation in analytics will partly come from better analytics tools for humans, but also from better artificial intelligence-based analytics.

Disclosure: I was invited to be an IBM Futurist and attend the Analytics for All without cost. IBM paid for my travel and expenses. IBM has not compensated me to write about Watson Analytics. I am a paying customer of Watson Analytics.


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Sharing innovation and strategy at Bentley University

I recently had the privilege of guest lecturing at Bentley University’s eMarketing class, hosted by CC Chapman. The most important point of the evening was that strategy is where we must always start as marketers.

  • If we don’t know why we’re doing something, we don’t have a winning strategy.
  • If we don’t have SMART goals, we don’t have a winning strategy.
  • If we don’t respect the limits time imposes on us, or our resources and competitors’ strategies, we don’t have a winning strategy.

In Leading Innovation and Marketing Blue Belt, I share this formula for strategy:

definition_of_strategy.jpg

Strategy is goals times methods, limited by time and the environment.

  • If we’ve got the right goals but the wrong methods, our strategy will fail.
  • The reverse is also true.
  • No goals or no methods? Multiply anything times a zero and we get zero.

If you’re starting marketing and you’re not talking goals and methods, or constraints on those goals and methods, you’re not talking strategy — and strategy is where you must start.


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