Survey Finds CEO Confidence Declines In Third Quarter
CEO confidence slipped in the third quarter after showing upward momentum in 2015’s second quarter. The Measure of CEO Confidence, produced by The Conference Board and PwC, now reads 48, down from 58 in the second quarter of 2015. A reading of more than 50 points reflects more positive than negative responses.
“Confidence among CEOs waned in the third quarter,” says Lynn Franco, director of economic indicators at The Conference Board. “However, expectations for the U.S., Europe and India remain positive. Short-term expectations for Brazil remain subdued, as does the outlook for Japan, but sentiment regarding China’s prospects has deteriorated considerably. Regarding spending plans, the results were mixed. More than a quarter of chief executives report increasing their companies’ capital spending plans since January, while 20 percent say they have scaled back spending.”
The survey found that CEOs’ assessment of current economic conditions was considerably less positive than in the second quarter. Now, 19 percent say conditions are better compared to six months ago, down from 46 percent last quarter. Furthermore, business leaders’ assessment of conditions in their own industries was less positive, with just 18 percent claiming conditions in their own industries have improved, compared with 49 percent in the previous quarter.
CEOs are also less optimistic regarding the short-term outlook than earlier this year. Slightly over 22 percent of business leaders expect economic conditions will improve over the next six months, down from 38 percent last quarter. Expectations for their own industries were also more pessimistic, with less than 17 percent of CEOs anticipating an improvement versus 40 percent in the second quarter.
More than a quarter of chief executives report increasing their companies’ capital spending plans since January of this year, while 20 percent have scaled back spending, the survey found. In 2014, 21 percent of respondents had increased their capital spending plans and 17 percent had made cuts. An increase in sales volume was one of the most common reasons given for increasing capital investment plans, while a decline also played a key role in scaling back spending plans.