CEOs' confidence drops in 2Q
Worried that economic growth is slowing
By Furniture Today Staff -- Furniture Today, July 19, 2005
NEW YORK -- Chief executives across the United States are less confident about the state of the economy now than they were in the first quarter of this year, according to the Conference Board's latest survey of CEOs.
The CEO Confidence Measure fell to 55 in the second quarter, after registering 62 in the first quarter of this year. A reading of more than 50 points reflects more positive than negative responses. The survey includes about 100 business leaders in a wide range of industries.
“While overall confidence remains relatively positive, the latest reading reflects growing concerns that U.S. economic growth may be slowing down,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “And, while the outlook for corporate profits remains optimistic, rising interest rates and oil prices may curb business leaders’ projections.”
CEOs’ assessment of current conditions deteriorated over the last quarter. Approximately 44% of CEOs claim current economic conditions have improved, down from nearly 59% last quarter. In assessing their own industries, close to 38% say conditions are better, down from approximately 57% last quarter.
CEOs’ short-term outlook has also deteriorated. 37% of business leaders expect economic conditions to improve in the coming months, down from 43% last quarter. Expectations for their own industries were also somewhat more subdued with 35% anticipating an improvement, down from 47% last quarter.
On the issue of profit expectations during the next 12 months, 68% of chief executives anticipate increases. However, there are some marginal differences by category of business. Those engaged in the non-durable goods industry are the most optimistic, with 75% expecting profits to increase. Executives in the durable goods industry are somewhat less optimistic, with 71% anticipating a rise in profits. Only 61% of CEOs in the service industry expect profits to increase.
Among CEOs who expect profits to increase, 51% cite an increase in market/demand growth as the main source of improvement, 30% cite cost reductions, 16% cite price increases and the remaining 4% believe technology will drive profits up.
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