CEO confidence inches down; less optimistic about growth
Chief executive officers’ confidence in the economy declined slightly in the second quarter, but overall sentiment still remains positive.
That’s according to The Conference Board’s Measure of CEO Confidence, which increased in the first quarter of 2018. The metric now reads 63, down from 65 in the first quarter of 2018 (a reading of more than 50 points reflects more positive than negative responses).
"CEOs' optimism regarding the growth prospects for both mature and emerging economies have eased considerably since the beginning of the year,” said Lynn Franco, director of economic indicators at The Conference Board. “However, most CEOs expect profits will increase over the coming year, with market/demand growth and cost reductions the major driving forces."
Looking ahead, the expectations of CEOs regarding the economic outlook are much less optimistic than last quarter. Now, just 48% expect economic conditions to improve over the next six months, compared to 63% in the second quarter. CEOs' expectations regarding short-term prospects in their own industries over the next six months were relatively flat, with only 42% anticipating an improvement in conditions.
CEOs' assessment of current economic conditions, however, was about the same as in the first quarter of 2018, with 74% saying conditions are better compared to six months ago. CEO sentiment was also virtually unchanged regarding the assessment of current conditions in their own industries, with about 51% saying conditions are better than six months ago.
CEOs are optimistic about profit expectations for the next twelve months, with about 91% expecting profits to increase, compared to 71% last year.
Among chief executive officers who expect profits to rise, 62% say market/demand growth will be the primary driving force, while 15% cite cost reductions and a similar proportion citing price increases. New technology is cited by 8% of CEOs as the primary source of improvement in profits.
That’s according to The Conference Board’s Measure of CEO Confidence, which increased in the first quarter of 2018. The metric now reads 63, down from 65 in the first quarter of 2018 (a reading of more than 50 points reflects more positive than negative responses).
"CEOs' optimism regarding the growth prospects for both mature and emerging economies have eased considerably since the beginning of the year,” said Lynn Franco, director of economic indicators at The Conference Board. “However, most CEOs expect profits will increase over the coming year, with market/demand growth and cost reductions the major driving forces."
Looking ahead, the expectations of CEOs regarding the economic outlook are much less optimistic than last quarter. Now, just 48% expect economic conditions to improve over the next six months, compared to 63% in the second quarter. CEOs' expectations regarding short-term prospects in their own industries over the next six months were relatively flat, with only 42% anticipating an improvement in conditions.
CEOs' assessment of current economic conditions, however, was about the same as in the first quarter of 2018, with 74% saying conditions are better compared to six months ago. CEO sentiment was also virtually unchanged regarding the assessment of current conditions in their own industries, with about 51% saying conditions are better than six months ago.
CEOs are optimistic about profit expectations for the next twelve months, with about 91% expecting profits to increase, compared to 71% last year.
Among chief executive officers who expect profits to rise, 62% say market/demand growth will be the primary driving force, while 15% cite cost reductions and a similar proportion citing price increases. New technology is cited by 8% of CEOs as the primary source of improvement in profits.