February 2012 Channel Business Index: Slight Expansion For VARs

Channel business expanded slightly in February compared to the previous month, according to the latest Channel Business Index (CBI) research developed by Everything Channel. The CBI is modeled after the Non-Manufacturing Index (NMI), compiled by the Institute for Supply Management, a well-accepted economic indicator of the health of the services market.

The overall CBI index rose to 62.6 in February, up from 56.0 in January. A reading above 50 for the index indicates the market is expanding while a number below 50 indicates the sector is contracting. The figure is determined by a monthly CRN survey of solution providers that measures business activity, sales, employment, business outstanding, vendor deliveries, finished product inventories and input costs.

The business outstanding average tracks the backlog of work/orders through the channel. The CBI figure, an indicator of future earnings, increased to 59.7 in February, from 53.9 in January, indicating that the backlog of orders increased during February. The NMI business outstanding average also increased in February, to 53.0 from 49.5 in January.

Meanwhile, sales also expanded in the channel in February. The sales average increased to 66.7, up from 64.5 in January, according to the CBI. The NMI sales average also increased to 61.2 from 59.4 in January.

The CBI employment average fell slightly in February after a marked increase from December 2011 to January of this year.

The CBI asked solution providers whether employment at their company was higher, lower or the same compared to January. The employment average was 66.0 in February, compared to 68.5 in January for the Channel Business Index (it had been 60.7 in December 2011). The NMI employment average also declined slightly, to 55.7 in February from 57.4 in January.

The input cost average, which measures the prices of vendor products, services and staff, fell in February to 59.1 from 66.7 in January, according to the CBI. It marked the second straight month in which input costs had declined. By comparison, the NMI showed an increase in input costs, to a 68.4 average in February from 61.2 in January.

Finished Product Inventory average measures the general inventory of finished products at solution providers. It increased to 52.7 in February from 48.5 in January, according to the CBI. The NMI data shows a similar trend, with a 53.5 average in February, compared to a 47.0 average in January.

The time taken by vendors to deliver orders increased in January, according to the Channel Business Index. The vendor delivery average was 47.3 in February, compared to 43.6 in January. Meanwhile, the NMI average indicates a slight decrease in time to deliver orders, to 49.5 in February from 51.0 in January.

Channel Business Index:
January 2012 Channel Business Index
Channel Business Index Q4