Survey: U.S., Europe CFO Economic Optimism Drops
According to the latest “CFO Outlook Survey” conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business, CFOs, surrounded by a myriad of critical financial issues and global events ranging from the LIBOR scandal and financial crisis, to the Supreme Court’s decision on healthcare and the upcoming U.S. elections, are experiencing alarming declines in optimism toward their businesses and especially the global economy. Despite uncertainty and predictions on a prolonged recovery starting in 2014, U.S. CFOs reveal that their companies are pushing forward with plans to hire and increase wages, and demonstrate confidence in their risk management.
Respondents to the quarterly survey, which polls CFOs of public and private businesses, primarily in the U.S., Europe (Italy and France), Mexico and Japan on their economic and business confidence, revealed some of its lowest marks in optimism toward the global economy since the question was added in 2010.
European CFOs’ optimism in the global economy dropped significantly to 43.2 (from 54.00 in Q1), while their level of confidence in their own companies decreased to 54.50 (from 58.30 in Q1). U.S. CFOs confidence in the global economy also diminished this quarter, falling nearly eight points to 44.1 (from 51.9 in Q1); optimism in their own companies dropped to 67.80 (from 70.80 in Q1). The CFO Optimism Index for the U.S. economy saw similar trends as it declined nearly five points to 55.40 (from 60.60 in Q1). Although U.S. CFOs are less optimistic and expect costs to increase in a number of areas including healthcare, technology, capital expenditures and compensation, they expect significant increases in revenues (11%) and net earnings (15%) in the next 12 months. In sharp contrast, European CFOs expect modest increases in costs and revenues with practically no increase in net earnings.
“Having faced a turbulent economic environment in the first half of 2012, CFO confidence has understandably begun to erode,” said Marie Hollein, president and CEO of FEI. “With an upcoming presidential election in the U.S., economic turmoil in Europe, and ongoing widespread investigations into financial institutions, there are credible reasons for the dip we have seen in CFO confidence. Still, many CFOs expect for company revenues to increase, a good sign for hiring, especially in the U.S. as well as increased capital spending and investments made in both staff and equipment.”
For additional survey results, click here.