Financial executives at U.S. companies continue to be concerned about the economy, with only two out of five executives expecting growth in 2013, according to the Bank of America Merrill Lynch 2013 CFO Outlook.
The 602 executives who participated in the 15th annual survey gave the U.S. economy an average score of 49 out of 100, up from 44 in the 2012 report. CFOs gave the global economy a score of 45, up from 43 a year ago.
Optimism about economic growth remained muted, with only 39% of CFOs predicting expansion in 2013, compared with 38% last year. Perhaps more telling, 24% of executives said they expect the economy to contract this year, up significantly from 11% in 2012.
“It is clear that uncertainty continues to linger among CFOs, which is understandable given the broader economic issues both in the U.S. and overseas,” said Alastair Borthwick, head of Global Commercial Banking at Bank of America Merrill Lynch. “Until they see solid evidence of stability, CFOs will be guarded in their optimism and growth plans. Expansion still is possible but may be limited in the short term to certain industries and markets.”
One area of significant growth in the latest CFO Outlook was international activity, with 73% of CFOs saying their companies are involved in non-U.S. markets. That’s up from 54% in the previous annual survey, and executives reported increased buying from non-U.S. markets (62% vs. 47% last year), selling to non-U.S. markets (55% vs. 34%) and operations in non-U.S. markets (30% vs. 15%).
“Companies across the U.S. are doing more business around the world, which adds another dimension to their financial needs,” Borthwick said. “We’ve seen this expansion and diversification with many Bank of America Merrill Lynch clients, who value their access to our expertise in providing global solutions at the local level.”
Only 17% of CFOs expect their companies’ borrowing needs to increase in 2013, down from 28% in 2012, while 17% expect those needs to decrease, up from 12%. Regarding financing, 19% of executives expect the cost of capital to increase, down from 21% last year.
M&A activity could pick up slightly, with 22% of CFOs saying they expect to participate in a merger or acquisition in 2013, up from 18% a year ago.
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