Home | Growth | CFO Survey: Sharp decline in expectations for China creates concern

CFO Survey: Sharp decline in expectations for China creates concern

By
Font size: Decrease font Enlarge font
CFO Survey: Sharp decline in expectations for China creates concern

Own-company earnings growth, revenue growth and capital spending expectations at or near all-time lows.

According to a quarterly survey undertaken by professional services firm Deloitte, chief financial officers are concerned about the impact of the slowing Chinese economy on economies around the world as well as prospects for their own companies.

After weakening gradually over the past few quarters, only 4% of CFOs now regard the Chinese economy as good, compared with 23% in Q2. While 59% of CFOs remain optimistic about the North American economy, just 5% describe the European economy as good, which is unchanged from Q2.

Concerns continued when CFOs were asked about own-company expectations, with the survey's key performance metrics all at or near survey lows. Capital spending, revenue growth and domestic hiring expectations are near survey lows at 4.3%, 4.4% and 1.4%, respectively, while earnings growth expectations matched last quarter's survey-low at 6.5%.

Additionally, while this survey recorded an 11th straight quarter of positive net optimism at +14.2%, it is at the lowest level in almost three years, as is the percentage of CFOs expressing rising optimism (34%). A majority of CFOs, 60%, continue to say U.S. equity markets are overvalued. Notably, responses from CFOs were collected over the two-week period before US equity markets declined sharply on Aug. 24, 2015.

"While CFOs are generally an optimistic group, they are understandably taking a more cautious view of the global economy and their own companies than in previous quarters," said Sanford Cockrell III, national managing partner of the U.S. CFO Program, Deloitte LLP. "With so many sources of volatility and uncertainty, highlighted by challenges in China, it is difficult for most companies to aggressively pursue growth — and this is reflected in the conservative investment and hiring expectations expressed by CFOs this quarter."

1 2 »
Join PRESIDENT&CEO on LinkedIn

Subscribe to comments feed Comments (0 posted)

total: | displaying:

Post your comment

  • Bold
  • Italic
  • Underline
  • Quote

Please enter the code you see in the image:

Captcha