The Chief Executive magazine CEO Confidence Index, a leading economic indicator of executive sentiment, reversed its historic decline, which had started in August, and rose eight percent to 122.1 points in December. The slight gains made last month mark the end of a weak year in which the CEO Index fell 26 percent and recorded the worst ever six-month decline in its history.
Following the rather dramatic declines in the second half of the year, all of the component indices of the CEO Index rose in December in a sign of possible “soft landing” for which most CEOs are hoping.
“The shift in the direction of the CEO Index is an encouraging sign for the economy,” said Ed Kopko, CEO and publisher of Chief Executive magazine. “However, it is too soon to interpret this as a sign of sustained reversal on economic trends. All in all, CEOs believe that lower interest rates are helping to constrain the effects of the subprime meltdown, but they fear that they may also be contributing to a deeper and more sustained correction of the markets.”
In a sign of encouragement, the Business Conditions Index, which tracks faith in current and near-term business conditions, recorded the biggest gains in December, rising nine percent. Rating the current business conditions in the
Even the Employment Confidence Index, which recorded the lowest gains (two percent) showed signs of improvement, as 48 percent of CEOs expect the current employment conditions to hold over the next quarter, compared to 43 percent last month; 18 percent expect an increase, compared to 16 percent last month; and 33 percent expect employment to drop over the same period, compared to 41 percent in November. Similarly, most CEOs (54 percent) rate the current employment conditions in the
In general, the CEOs’ sentiments about the economy painted a rather mixed picture, as 43 percent predicted a gradual growth of the economy, while nearly 32 percent predicted no growth or decline. Approximately 22 percent of CEOs predicted a gradual decline.
Steven Schiltz, CEO and President of Minnesota Exteriors, Inc. said, “The first and second quarters of 2008 will be the slowest yet for housing.” While others, such as CEO Michael Corley of Progressive Employer Services, looked for the silver lining: “all this change and uncertainty will create opportunities!”
Among other indices, the Future Confidence Index made the second biggest gain, increasing more than eight percent to 98.9 points. Third was the Investment Confidence Index, which increased eight percent to 108.5 points, and finally, the Current Confidence Index increased by four percent to 156.6 points.
The CEO Confidence Index survey was conducted Dec. 6 through 17 among 292 top executives.
CEO Index, December 2007
|Current Confidence Index|
|Future Confidence Index|
|Business Condition Index|
|Invest Confidence Index|
|Employment Confidence Index|
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