CEOs Growing More Confident

The Conference Board issues a report called “CEO Confidence” on a quarterly basis.  It is probably without surprise that the gains in the second quarter were also gains in the third quarter.  Its index came in at 63, up from 55 in Q2.  With a break-even level at 50.0, this is getting better.  The only problem with this survey is that it is only derived from about 100 business leaders.

The recovery is not so sharp on cap-ex and business investment as the report showed almost 60% of respondents have cut back on capital spending plans since January.  But he report also notes that “growing optimism over the past several quarters should translate into increased spending in 2010.”  Only 7% had increased cap-ex plans.

The current economic conditions assessment showed that 68% feel that conditions had improved compared to six months ago.  That compares to only 32% a quarter ago.  Respondents were also considerably more positive in regard to their own business sectors as 55% claimed conditions are better versus only 24% a quarter ago.

The outlook is almost always more important than the rear view mirror.  The report noted that the six month outlook shows CEOs being more optimistic than last quarter with 58% expecting economic conditions to improve over the next six months.  That is up from 55% a quarter before.  Some 51% of CEOs anticipate an improvement in their own industries versus 45% a quarter ago.

Much of this data is probably stating the obvious if you have watched the stock market or if you have read through conference calls from key companies over the last 60 days or so.  We are getting past the green shoots, but at some point we will all demand a return to normal business conditions.

JON C. OGG
October 9, 2009