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CFOs' sentiment and expectations rebound in Q2

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CFOs' sentiment and expectations rebound in Q2

CFOs' expectations for revenue, earnings, capital spending and domestic hiring improve quarter-over-quarter, but down from the 25-quarter, long-term survey average.

A quarterly survey of CFOs by professional services firm Deloitte revealed a marked rebound of chief financial officers' confidence in their companies' longer-term prospects, likely in response to equity markets improving substantially since the first quarter of 2016.

CFOs are significantly more optimistic, as the survey recorded a net optimism reading of +30.0, representing the 14th consecutive quarter of positive net optimism and a sharp reversal from last quarter's reading of +1.7. The percentage of the CFOs surveyed who express rising optimism rose from 33% to 49%, while those expressing declining optimism fell from 31% to 19% quarter-over-quarter. Sentiment is net-positive across all industries, with CFOs in both the Manufacturing and Energy/Resources industries significantly more optimistic than they were last quarter.

"It's also important to note that all four business outlook measures are down when compared with long-term survey averages."

Four business outlook metrics tracked by the survey for 25 consecutive quarters — CFO expectations for growth in revenue, earnings, capital spending and domestic hiring — rebounded from multiple survey lows last quarter, but the gains for some metrics were modest. Revenue growth expectations, for example, rose to 4.0% from 3.3% from last quarter; earnings growth expectations rose to 7.7% from last quarter's survey low of 6.0%; and domestic hiring growth expectations rose to 1.1% up from a survey low of 0.6% last quarter. Capital spending expectations, however, rebounded sharply to 5.4% from a survey low of 1.7% last quarter. Meanwhile, dividend growth expectations fell to 2.9% — a new survey low — from 4.0% last quarter.

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