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CEO confidence improves slightly

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CEO confidence improves slightly

Expectations for prices increases remain muted.

According to a new survey by membership advisory firm The Conference Board and professional services firm PwC, CEO confidence, which had declined in the third quarter of 2014, increased slightly in the fourth quarter of 2014. The Measure of CEO Confidence now reads 60, up from 59 in the third quarter (a reading of more than 50 points reflects more positive than negative responses). 

"Optimism among CEOs increased moderately in the final quarter of 2014," said Lynn Franco, Director of Economic Indicators at The Conference Board. "Expectations for growth prospects in the US are slightly more upbeat, but less positive for Europe, China, Brazil and Japan. The majority of business leaders expect to increase selling prices in 2015, but only by about 1.4%."

CEOs' assessment of current economic conditions was virtually unchanged. Approximately 52% claim conditions are better compared to six months ago, about the same as in the third quarter of 2014.  Business leaders' appraisal of conditions in their own industries increased slightly, with 43% saying conditions in their own industries have improved, compared with 41% in the previous quarter.

"Expectations for growth prospects in the US are slightly more upbeat, but less positive for Europe, China, Brazil and Japan."

CEOs' expectations regarding the short-term outlook were more optimistic. About 49% of business leaders anticipate economic conditions will improve over the next six months, up from 44% in the previous quarter. However, 46% expect conditions to remain the same. Expectations for their own industries remain subdued, with 36% of CEOs anticipating an improvement, up from 34% in the third quarter. About 53% expect no change in conditions.

Global Outlook
CEOs are more positive in their assessment of current economic conditions in the United States but rated conditions in Japan, Europe, China and Brazil less favorably. Sentiment regarding current conditions in India was unchanged.

Looking ahead, only short-term expectations for the U.S. improved. CEOs are more pessimistic than last quarter regarding the outlook for Brazil, Japan, China and Europe. Expectations for India declined, but on whole remain positive.

Inflation Outlook: Modest Price Increases Expected
The majority of chief executives expect changes in their firms' selling prices in 2015 —with just 16% anticipating price increases in excess of 4%. On average, firms plan to hike prices by 1.4%. About 18% plan decreases and 23% foresee no change.



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