Double-Dip Evidence: CEO's Looking Less Confident

It is hard to consider a report with only 227 polled as being a total bogey for the whims and will of the nation.  But Chief Executive magazine’s CEO Index that may show at least some concern even to those who would be fine with green shoots.  The report shows the monthly CEO Index having pulled back by about 2% or 1.4 points to reading of 74.3 points for June.  The reasons may be more interesting than the report, because this breaks 3 consecutive months of increases.
This survey shows that CEOs are still wary about the current business climate.  Almost half see salary and hiring freezes, while about 30% are bracing for further layoffs.  As far as the rest, it looks as though almost every other component of the CEO Index fell in June.

The only exception to the drop was Future Confidence and Business Conditions Indices. The largest drop was the Current Confidence Index, which fell by 11% to 62.8 points.   The difference between the Current and Future Confidence Index, continued to widen for the third straight month.

The Future Confidence Index rose by 3% to 82.1 points.  One quote showed an expectation that “CEO confidence will begin to increase soon, catalyzing the actual turnaround in 2010.”  Some 45% of responding CEOs said they have a hiring freeze and 47% have a freeze on salaries.  Only 24% were hiring and 25% claimed to have salary and bonus increases.

This Current Confidence Index reading of 69.6 in May showed a drop of 6.8 points to 62.8 in June, and that was the worst component of the total index.  The Invest Confidence Index also dipped back under 100 as the May reading of 100.4 fell by 3.6 points to 96.8.

Again, a survey with 227 polled members is not a dead set rule of thumb.  It is too small of a sample to conclude for certain that things are headed south again for the overall business climate.   But it also is worth noting that these respondents are at the top of the company.  When a CEO has little confidence in the business climate, how aggressive are they going to be?

If the boss isn’t too confident at work, it is likely that the underlings aren’t making too aggressive of moves.

The full data can be found including more details and the tables and graphs at the Chief Executive site.

Jon C. Ogg
July 6, 2009