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Who’s ready for more green shoots? Last week we showcased findings from our most recent Corporate Board Member survey of public company directors, which found them increasingly optimistic about where the economy was headed, adding, of course, the usual boilerplate caveats about one data point not being a trend, yada yada yada.
Well, this morning we can add at least one more positive data point (and remember, at least in journalism, three is officially a trend). Chief Executive’s latest polling, released this morning, finds America’s business chiefs increasingly optimistic about where the economy is headed, with a growing proportion expecting conditions to rally by the end of the year.
Chief Executive’s August CEO Confidence Index, a survey of 157 CEOs fielded August 2-4, soared 14 percent over last month’s reading, to 5.8 out of 10, where 10 is Excellent. After four months of continuous decline, optimism clawed back two months of losses, as CEOs report seeing early indicators that by this time next year, the country will be in a recovery.
Polled CEOs say demand remains strong and pipelines active, supply chain strains have continued to ease, and overall costs are moderating. Digging into the numbers:
- Better, not worse. 30 percent of CEOs now expect conditions to improve over the next 12 months, up from only 14 percent in July. That’s a 114 percent increase month-over-month, and a significant narrowing of the gap between them.
- Profits up. 53 percent of CEOs polled in August forecast increasing profits over the next 12 months (+6 percent since July)
- Revs up. 63 percent expect revenues to rise (up 10 percent month-over-month)—the first increase recorded since the beginning of the year, in January.
- Hiring flat. At 46 percent, the proportion of those who plan to increase hiring over that same period has remained flat.
- Capex flat. From 40 percent in July to 38 percent in August, the proportion planning to increase capital expenditures dipped slightly.
“I am feeling more optimistic this month than in prior months that we may avoid a recession—or if we have it (or are in it), it will be brief,” said the CEO of a small PE-backed technology firm we talked to. “The economy was ‘too hot’ which is why we couldn't hire people, couldn't get goods from point A to point B, and it was causing craziness. By cooling it down, we will actually get back to a semi-normal labor market, which will bring wages back in line and a semi-normal supply chain. These will be welcome changes.” Very welcome. Read the full report >
— Dan Bigman, editor, and Melanie Nolen, research director, Chief Executive Group. dbigman@ChiefExecutiveGroup.com
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