Daily News: June 10, 2014

Survey: More CFOs Taking Aggressive Spending/Investment Approach

For the first time since 2010, senior finance executives across global regions are more aligned in their predictions of economic expansion, according to recent research from American Express and CFO Research. Overall, 72% of respondents predict economic expansion this year, while 17% say they plan to pursue aggressive spending and investment plans, compared to just 10% last year. As a further indication of their confidence, only 3% say they plan to decrease spending, down from 8% last year.

The findings in the seventh annual American Express/CFO Research Global Business and Spending Monitor are based on a sampling of senior finance executives based in North America, Europe, Latin America, Asia and Australia.

U.S. CFOs Optimistic, But Still Responding to Regulatory Pressures

The majority of U.S. respondents (75%) predict economic expansion – however, they remain among the most cautious on spending and investment. In particular, regulatory and political concerns seem to weigh more heavily on the U.S. than they do on the rest of the world, according to respondents. More than a third of finance executives in the U.S. (40%) expect regulatory changes will have a negative impact on growth over the next year. This is in line with responses from last year’s survey, in which 45% of U.S. executives said complying with government regulation has become substantially more expensive over the past five years.

U.S. spending and investment plans also reflect these concerns. Just 13% of U.S. respondents plan to increase spending and investment by 10% or more this year and only 9% are taking an aggressive stance toward spending. This may explain the declines in spending on headcount and other assets while spending in other areas remained relatively flat this year. Still, there are signs that the U.S. is slowly becoming less conservative on spending and investment – for example, 36% of U.S. finance executives are taking a tightly controlled approach this year, a drop from 41% in 2013.

Spending Plans Don’t Always Echo Growth Expectations

While it may seem contradictory at times, spending and investment plans in some countries remain more conservative than reported growth expectations, particularly in mature economies. European economies tended to report lower-than-average increases in planned spending, despite the robust rise in economic confidence in the region. Senior finance executives from Germany and the U.K. say they plan average increases of only 8% and 9%, respectively, indicating they may still retain some of the caution that has characterized spending and investment in recent years. Respondents from the U.S. are even less likely to increase spending and investment, noting only a 5% average increase for the coming year — the lowest in the survey.

To read the entire press release, click here.