CEO Confidence Index January 2006
January 24 2006 by Chief Executive
Every component index also rose this month, but the Employment Confidence Index led the pack with a gain of 15 points. Over half of CEOs surveyed (53%) rate current employment conditions as “good.” This is the first time ever a simple majority has been so positive on hiring. Additionally, 55.5% of CEOs surveyed expect hiring to increase at their companies over the next quarter, a 5% increase from last month. Suggesting rising employment levels in the coming months, the employment index has also risen almost 40 points since October.
CEOs are also very optimistic about investment conditions as the Investment Index also rose strongly this month by 10.7 points to 151.2. Over 50% of CEOs (50.4%) ranked current investment opportunities as “good” as well this month, up almost 8% from last month.
CEOs are very optimistic about the economy in general. Said one CEO wishing to remain nameless, “despite the picture the media paints, the underlying strength of the economy is revealed in the way it continues to shrug off major shocks like Katrina.” Confidence in the current economy comes with some caveats, however: some CEOs fear the strong string of raising rates could slow future progress. One CEO noted, ” the Fed has been too quick to continue raising rates, they have gotten ahead of the power curve, and should consider backing off during the next few sessions.”
Chief Executive magazine also conducted additional polling this month, following up on last year’s “Best and Worst States” report. This year, Chief Executive further investigated the reasons behind those choices. CEOs were asked to rank the importance of several social, political, and economic factors in choosing where to do business. CEOs ranked labor and political issues as most important. They ranked workforce quality as the most important factor when choosing where to do business, accounting for approximately 20.6% of their decisions, followed by labor costs. After that, their priorities were taxation and regulation (for full results see attached data).
In application of these criteria, CEOs were asked to give their top three choices for best and worst states to do business. They ranked California, New York, and Massachusetts as the worst three states to do business and Texas, Nevada, and North Carolina as the best states. There were no changes in the best and worst 3 states rankings from last year except North Carolina, which jumped from last year’s position of 5 to 3. CEOs also gave their advice to the governors and state legislatures. Common advice to states ranked as poor was to ease regulations and state interference in business affairs, and common advice to well-performing states was to keep their lead by educating their citizens. Said Edward M. Kopko, president and CEO of Chief Executive Group, “The message CEOs are trying to communicate is that they want to do business in states run by political common sense and policies that support business growth.”
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