CEOs’ Outlooks Improved In Fourth Quarter 2016
The Conference Board reports that company leaders grew more upbeat about their businesses’ prospects in fourth quarter 2016. The Conference Board Measure of CEO Confidence, which had declined slightly in third quarter 2016, now reads at 65. A reading of more than 50 points reflects more positive than negative responses.
“CEO Confidence surged in the final quarter of 2016, reaching its highest level in nearly six years,” says Lynn Franco, director of economic indicators at The Conference Board. “CEOs were considerably more optimistic about short-term growth prospects in the U.S. than in the third quarter, and to a lesser degree about prospects in developed and emerging markets. Regarding prices in 2017, chief executives expect to hike prices by less than 1.5 percent on average.”
CEOs’ assessment of current economic conditions grew considerably more optimistic in the fourth quarter. Close to 60 percent described conditions as better compared to six months ago, up from 17 percent last quarter. Their appraisal of current conditions in their own industries also improved, with 46 percent stating conditions in their own industries have improved versus 21 percent in the third quarter.
Business leaders’ short-term outlook on the economy also improved in fourth quarter, with roughly 67 percent predicting better economic conditions over the next six months, up from 25 percent last quarter. Their expectations for their own industries also grew more favorable, with 58 percent anticipating improvements over the next six months verses 23 percent in third quarter.
CEOs’ short-term outlook for the U.S. economy also improved markedly, with approximately 67 percent expecting better economic conditions over the next six months, up from 25 percent last quarter. The outlook for their own industries was also more favorable, with 58 percent of CEOs anticipating an improvement over the next six months, compared to about 23 percent in the third quarter.
Most CEOs expect to increase prices in 2017, with about two-thirds anticipating changes in their selling prices of less than four percent and only seven percent of business leaders foreseeing increases in excess of four percent. On average, they predict price hikes of 1.3 percent. About 12 percent plan decreases and 14 percent foresee no change.