American CEOs Less Confident About Economy

Before you go, we thought you'd like these...
Before you go close icon
American CEOs are worried about the economy, too. According to a Young Presidents' Organization Global Pulse July economic sentiment survey, CEOs are less confident about jobs, sales and the overall business climate than they were three months ago. This is the first time in a year that the confidence index has weakened.

"After moving steadily higher for four consecutive quarters, the U.S. YPO Confidence Index fell back in July as CEOs trimmed their forecasts for sales, hiring and capital spending," said Dave Maney, spokesman for the YPO survey and chairman and co- founder of Headwaters MB, a middle-market investment bank.

The U.S. CEO Confidence Index fell to 57.5 in July from 61.0 in April. While readings of over 50 still show optimism, only 42% of CEOs expect the overall business climate to be better in six months than it is today, and one-fifth expects it to get worse. To compare, in April, 64% were optimistic and only 8% pessimistic.

No Plans to Hire, CEOs Say

With respect to jobs, the percentage of CEOs expecting to increase their staff by 10% or more has declined to 30% from 36% three months earlier. Instead, 62% of CEOs now expect their employee count to be about the same over the next year compared to 58% in April.

"The responses to the survey would indicate that employment growth in the United States is likely to remain in neutral for the foreseeable future. One bright spot in the results is in the manufacturing sector, where more than 70% of respondents forecast higher sales this time next yea," Maney added.

Small companies (less than 100 employees) were the most optimistic about expanding their payrolls, with 35% expecting to add staff over the coming year. Just 24% of large companies (more than 500 employees) expect to expand staff, and 28% of medium-sized companies (100 to 500 employees) plan to hire.

With CEOs not expecting relief in the jobs market and, therefore, no improvement in consumer spending, it's not surprising that 35% of them now expect sales to remain about the same compared to 26% in April. Meanwhile, the percentage of CEOs bullish about their company's sales outlook (10% or more increase over the next year) declined to 57% in July from 69% in April.

Manufacturing is Optimistic, Construction is Not


Sentiment in the construction sector ranks as the "most negative," while the production sector is the most optimistic. More than 70% of the manufacturing companies surveyed expect sales to increase in the next 12 months compared with just 31% of the construction companies. Meanwhile, 43% of the manufacturing respondents expect higher fixed investment spending over the coming year compared with 33% of service companies and just 16% of construction companies.

The global index also fell to 59.8 in July, dragged down by weakened confidence in six of the nine regions, most notably the U.S., the European Union and Australasia. Asia and Africa were the only regions whose confidence rose from last quarter, and Canada was unchanged after having fallen the quarter before last.
Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners