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CEO confidence declines again

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CEO confidence declines again

Yikes, this isn’t good.

While still positive, a new report from The Conference Board and professional services firm PwC indicates that confidence among CEOs is slipping.

Lynn Franco, Director of Economic Indicators at The Conference Board, commented on the recent survey.

"While CEOs say economic conditions have improved from the start of the year, their expectations for growth in the short-term have softened. Overall, CEOs remain optimistic about growth prospects in the U.S. and India, but sentiment for Europe has declined considerably. Expectations for China and Japan have moderated, and CEOs remained negative about Brazil's near-term prospects. Less than a quarter of chief executives report increasing their companies' capital spending plans since January, while less than 20% have scaled back spending."

CEOs' assessment of current economic conditions, however, was more positive. Now, approximately 52% claim conditions are better compared to six months ago, up from 46% in the second quarter of 2014. Conversely, business leaders' appraisal of conditions in their own industries declined, with just 41% saying conditions in their own industries have improved, compared with 48% last quarter.

CEOs' expectations regarding the short-term outlook were less optimistic. Slightly more than 44% of business leaders anticipate economic conditions will improve over the next six months, down from 53% last quarter. However, nearly 51% expect conditions to remain the same. Expectations for their own industries are also more subdued, with 34% anticipating an improvement, down from 46% in the second quarter. About 51% expect no change in conditions.

Global Outlook
CEOs are more positive in their assessment of current economic conditions in the United States and India, but remain negative regarding conditions in Brazil, China, Europe and Japan. More notably, business leaders' assessment of conditions in Europe and Japan went from positive (a reading of 50 and over) to negative, while India increased into positive territory.

Looking ahead, short-term expectations for Europe, China and Japan declined but remain slightly positive, while expectations for Brazil edged up but remain negative. Overall, CEOs are most positive about the outlook for both the United States and India.

More CEOs Increasing Capital Spending Plans
Nearly 21% of chief executives report increasing their companies' capital spending plans since January of this year, while 17% have scaled back spending, based on a supplementary question. In 2012, when we last asked this question, only 9 percent of respondents had increased their capital spending plans and 32% had made cuts. An increase in sales volume was one of the most common reasons given for increasing capital investment plans. A decline in sales volume also played a key role in scaling back spending plans.

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