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CEO Confidence Continues to Decline
06 Jan. 2016
The Conference Board Measure of CEO Confidence™, which had declined sharply in the third quarter, decreased further in the fourth quarter. The Measure now reads 45, down from 48 in the third quarter of 2015 (a reading of more than 50 points reflects more positive than negative responses).
“Confidence among CEOs weakened further in the final quarter of 2015,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Expectations for the U.S and Europe are now slightly negative while expectations for emerging markets remain downbeat. Regarding prices in 2016, chief executives expect to hike prices by slightly less than 2 percent on average.”
CEOs’ assessment of current economic conditions was less positive than in the third quarter. Now, 14 percent say conditions are better compared to six months ago, down from 19 percent last quarter. Likewise, business leaders’ assessment of conditions in their own industries was less positive, with 11 percent claiming conditions in their own industries have improved, compared with approximately 18 percent in the prior quarter.
CEOs remain pessimistic regarding the short-term outlook, with 16 percent expecting economic conditions to improve over the next six months, down from 22 percent last quarter. However, expectations for their own industries were slightly better. Now, close to 19 percent of CEOs anticipate an improvement in the next six months, up from 17 percent in the third quarter.
CEOs were less positive in their assessment of current economic conditions for the U.S., but on balance remained positive. Sentiment regarding current conditions in Europe and Japan declined from favorable to slightly negative. Current conditions in China and Brazil continued to be rated quite negatively, despite a slight improvement in confidence.
Looking ahead six months, sentiment has turned negative for the U.S. and Europe. The outlook for the remaining developed and emerging markets remains downbeat, with the exception of India where confidence improved slightly.
Inflation Outlook: Modest Price Increases Projected for 2016
The majority of chief executives expect changes in their firms’ selling prices in 2016 – with close to 58 percent anticipating price increases of less than 4 percent and 10 percent expecting increases in excess of 4 percent. On average, firms plan to hike prices by 1.9 percent. Only 10 percent plan decreases and 22 percent foresee no change.
Survey results were fielded from mid-November to mid-December
Source: CEO Confidence Survey 4th Quarter 2015
The Conference Board