Chief Executive Magazine’s CEO Confidence Index, a leading economic indicator of executive sentiment, continued to make modest gains in January, increasing 1.6 points to 123.7. The slight gains made in January mark the second consecutive month of gains after the rather dramatic declines in the second half of 2007.
All of the five component indices of the CEO Index rose in January with the only exception of Business Conditions Index, which fell 3.4 points to 125.4. The majority of CEOs, 54 percent, rated business conditions in the US as “normal,” while there was an even split between those who rated the conditions as “good” and “bad” at 23 percent each.
“CEOs seem to be in a wait-and-see mode at the moment,” said Ed Kopko, CEO and publisher, Chief Executive Group. “While CEOs’ confidence seems to have stabilized over the past two months, our data suggests that they are reluctant to make any aggressive hiring or investing decisions until they are certain that we have felt the full impact of the credit crisis on the economy.”
The Investment Confidence Index made the biggest gains this month, increasing 5.2 points to 113.7 points. The Employment Confidence Index, which had seen steady declines in the four months leading to December, was the second best performing component and increased 2.5 points to 134.9.
“The CEO Employment Index serves as a leading indicator on future job growth and its impact is felt approximately four-five months after our figures are released,” continued Kopko. “Our data through late summer and early fall had predicted steady declines in employment through the first quarter of this year, and we are seeing that prediction take effect now. Our current Index numbers are pointing to very slow job growth over the coming months.”
On the topic of economy, CEOs painted a mixed picture, but one which was not particularly gloomy. In fact, 39 percent of CEOs predict a gradual growth in the economy while 24 percent of CEOs predict a gradual decline and 32.5 percent expect no growth or decline.
As such, contradicting the sentiment on the street, some CEOs believe that conditions are not as bad as most pundits would suggest, and that “despite some news to the contrary and regardless of the housing mortgage issues, the economy is strong.”
The CEO Confidence Index survey was conducted Jan. 3 through 10-before the Jan. 22 Fed rate cut-among 605 top executives.
CEO Index, January 2008
Current Confidence Index
Future Confidence Index
Business Condition Index
Invest Confidence Index
Employment Confidence Index