The Conference Board Measure of CEO Confidence™, which had declined in the fourth quarter of 2015, increased in the first quarter of this year. The Measure now reads 47, up slightly from 45 in the final quarter of last year (a reading of more than 50 points reflects more positive than negative responses).
“CEO Confidence improved in early 2016, but sentiment about the economy remains somewhat guarded,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The short-term outlook for the U.S, Europe and India improved from last quarter, but expectations for China and Brazil declined further. Regarding the employment outlook, nearly thirty percent foresee employment increases in their industry, while 40 percent foresee declines. Regulation, litigation and health care costs were cited as major obstacles to hiring new workers.”
CEOs’ appraisal of current economic conditions improved, with about 19 percent saying conditions are better compared to six months ago, up from 14 percent last quarter. Likewise, business leaders’ assessment of conditions in their own industries was also more positive, with 18 percent claiming conditions in their own industries have improved, versus just 11 percent in the previous quarter.
CEOs are less pessimistic regarding the short-term outlook, with 18 percent expecting economic conditions will improve over the next six months, up from 16 percent last quarter. The outlook for their own industries was also better, with 22 percent anticipating an improvement in the next six months, versus approximately 19 percent in the fourth quarter.
CEOs’ assessment of current conditions in India and Europe improved, but readings for the latter still remain negative. Conversely, sentiment regarding conditions in China and Brazil deteriorated further in the first quarter. Sentiment regarding conditions in the U.S. remained neutral, while Japan remains negative.
Expectations for the U.S., India, and Europe improved, with CEOs moderately upbeat about short-term prospects. The outlook for Japan improved marginally, but overall sentiment remains negative. Expectations for China and Brazil declined further, with CEOs very pessimistic about short-term growth prospects in these markets.
Hiring Plans Moderate in 2016
Nearly three out of every ten CEOs surveyed anticipate an increase in employment levels in their industry over the course of the year, while four out of ten anticipate a decrease. When this question was last asked four years ago, about half of the CEOs surveyed anticipated an increase in employment levels, and about 15 percent anticipated a decrease.
On a separate question, regulation and litigation are major obstacles to hiring new workers, followed by health care costs. Wage and salary costs, as well as other fringe benefits, are of lesser concern when hiring new workers.
Survey results were fielded from mid-February to mid-March
Source: CEO Confidence Survey 1st Quarter 2016
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