CEO Confidence Rebounds In First Quarter 2016 But Remains Subdued
While still hovering in generally negative territory, CEO confidence rose in first quarter 2016 after slipping during the final months of 2015. The Conference Board’s Measure of CEO Confidence now reads 47, up from 45 in the final quarter of last year. A reading below 50 points reflects more negative than positive responses.
“CEO Confidence improved in early 2016, but sentiment about the economy remains somewhat guarded,” says Lynn Franco, director of economic indicators at The Conference Board. “The short-term outlook for the U.S, Europe and India improved from last quarter, but expectations for China and Brazil declined further. Regarding the employment outlook, nearly thirty percent foresee employment increases in their industry, while 40 percent foresee declines. Regulation, litigation and healthcare costs were cited as major obstacles to hiring new workers.”
The appraisal of current economic conditions improved in the first quarter, with about 19 percent of the CEOs surveyed saying conditions are better compared to six months ago, up from 14 percent last quarter. Business leaders’ assessment of conditions in their own industries was also more positive, with 18 percent claiming conditions in their own industries have improved, versus just 11 percent in the previous quarter.
CEOs are less pessimistic regarding the short-term outlook, with 18 percent expecting economic conditions will improve over the next six months, up from 16 percent last quarter. The outlook for their own industries was also better, with 22 percent anticipating an improvement in the next six months, versus approximately 19 percent in the fourth quarter.
Looking abroad, the CEOs’ assessments of current conditions in India and Europe have improved, but readings for the latter still remain negative. Sentiment regarding conditions in China and Brazil deteriorated further in the first quarter, while Japan remains negative.
Expectations for the U.S., India, and Europe improved, with CEOs moderately upbeat about short-term prospects. The outlook for Japan improved marginally, but overall sentiment remains negative. China and Brazil declined further, with CEOs very pessimistic about short-term growth prospects.