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CEO confidence declines

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CEO confidence declines

A mixed bag from the nation’s chief executives.

A report issued jointly by advisory firm The Conference Board and professional services firm PwC indicated that CEO confidence declined in the first quarter after having improved slightly in the fourth quarter of 2014.  The Measure of CEO Confidence index now reads 57, down from 60 in the fourth quarter (a reading of more than 50 points reflects more positive than negative responses). 

"Optimism among CEOs retreated in the first quarter of 2015, and while expectations for growth prospects in the U.S. remained positive, they were less favorable than last quarter. Meanwhile, expectations for Europe, China and Brazil continued to decline," said Lynn Franco, Director of Economic Indicators at The Conference Board. "Regarding the price of oil, more than half of CEOs estimate the price will be between $55 and $74 a barrel six months from now, and two-thirds estimate that will be the price a year from now."

"CEOs were more pessimistic regarding the short-term outlook."

CEOs' appraisal of current economic conditions was more positive than last quarter. Approximately 55% claim conditions were better compared to six months ago, up from 52% in the fourth quarter of 2014.  However, business leaders' assessment of conditions in their own industries declined. Now, just 35% say conditions in their own industries have improved, compared with 43% last quarter.

CEOs were more pessimistic regarding the short-term outlook. About 38% of business leaders anticipate economic conditions will improve over the next six months, down from 49% last quarter. Expectations for their own industries, however, were down moderately, with 34% of CEOs anticipating an improvement, compared to 36% in the fourth quarter of last year.

Global Outlook  
CEOs were more positive in their assessment of current economic conditions in Japan, Europe, and China, but overall sentiment remains negative. CEO sentiment in the U.S. and India remains upbeat, but CEOs' assessment of Brazil has grown more pessimistic since last quarter. 

Looking ahead, expectations for India and the U.S. remain favorable, while CEOs remain pessimistic regarding the outlook for Europe, China, Japan, and Brazil.

CEOs Expect Moderate Increases in Oil Prices   
In a special question asked this quarter, CEOs were asked to estimate the price of a barrel of oil six and twelve months from now. About 56% estimate the price will be $55 to $74 a barrel six months from now, and two-thirds estimate that will be the price a year from now. Only 40% expect the price be $40 to $54 in six months' time, while just 15% expect this to be the case a year from now. Less than 5% expect oil will reach $75 over the next six months, but about 18% believe this is a possibility twelve months from now. None of CEOs surveyed foresee prices declining to $40 or less.

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