Index: 7 in 10 Say Conditions Are ‘Good’ or ‘Excellent’
It may not have been a full double-dip, but confidence in the security industry appears to be pulling out of its second significant downturn of the past few years.
After bottoming out amid the global economic recession in 2008, the SIA Business Confidence Index, which reflects the views of executives from 100 members of the Security Industry Association (SIA), climbed steadily over the next two years, increasing from just above 40 — on a 100-point scale — to around 80.
Then, like a slugger who is 2 for his last 37 at bats, confidence waned. The index lost nearly 25 percent of its value between the fourth quarter of 2010 and the third quarter of 2011, falling to just above 60 before inching up slightly at the end of the year.
The new year brought new optimism, though, with the index climbing from 61.5 to 65.3. In addition, nearly 7 out of 10 survey respondents said business conditions are good or excellent, and almost 6 in 10 said they think conditions will improve. More than two-thirds of respondents said they plan to increase spending or activity on new orders and product sales, an 11-point jump from the last quarter and 24-point hike from six months ago, while 62 percent are planning new product introductions, 6 points more than were doing so at the end of 2011 and 22 points more than in last year’s third quarter.
What are the factors contributing to the improvement? The performance of the U.S. economy probably had a lot to do with it. Unemployment was at or near 9 percent for much of last year before declining to a little over 8 percent by early 2012. The run-up to ISC West may have helped as well. The spring trade show and conference is the biggest event on the security industry calendar, and thinking about product launches and 20,000 or so potential customers in Las Vegas could have been a mood enhancer.
The bigger question is, will this upward trend continue? This, also, depends largely on the overall economy. The security industry, it has been said, is recession-resistant but not recession-proof. If businesses are spending less money — or if there are fewer businesses around to spend any money at all — security upgrades might be delayed. At the time of this writing, the federal government had just announced some disappointing May employment numbers, and the stock market reacted unfavorably. If this was just a blip and unemployment resumes its downward path this summer, the industry should be in great shape heading into ISC Solutions and Security Week in New York City in late October. If the economy weakens, things might be a little more challenging.
As the industry demonstrated in 2008-2009, it is prepared to meet economic challenges. Companies innovated and became more efficient and, as a result, have enjoyed steady growth in the past three years. Through all of this, SIA has worked to support its members and the industry as a whole, serving as a stable source of important industry standards, valuable networking opportunities, crucial intelligence about government activities and effective advocacy at both the federal and state level, and career and business-enhancing education programs.
All in all, there’s no reason to think negatively. Confidence is increasing and the economic news since January has generally been good. As the Monty Python troupe (almost) sang, always look on the bright side of … the economy.
Editor’s Note: The SIA Business Confidence Index is a regular feature in SIA’s Quarterly Research Update. For more information, visit www.siaonline.org/store.