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CEO Confidence Index January 2010

CEO Confidence Index Continues to Climb

Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, continued to improve in January. The CEO Confidence Index gained 7.8%, rising 7.2 points to 92.6. 

All five components of the CEO Confidence Index rose again in January, building on December’s gains. The gains in the individual components ranged from 3.2% to 14.6%. As in December, the component with the largest percentage gain was the Employment Confidence Index. Most CEOs feel the worse is now behind us. “It is about attitude and perseverance. We can make a difference and it’s up to us collectively to make it happen,” one CEO told Chief Executive. Another CEO commented, “In general, business is getting stronger on most fronts.” 

The Employment Confidence Index rose 10.9 points (14.6%) to 74.5. The Employment Confidence Index is a leading indicator of the unemployment rate. Many believe sagging employment has hindered a full economic recovery. One CEO commented, “The economy is not going to be solved until job replacement begins in earnest.” Another CEO added, “Things are improving. Job creation will be very slow as employers manage costs and use technology.”   

The Current Confidence Index gained of 2.8 points (4.2%), rising to 66.4. Low consumer confidence has reduced consumer spending – and demand for products. One CEO provided this perspective, “I think we are moving into a new economic normal – lower consumption, more savings and investing, as well as a period of higher than ideal unemployment.” Like many aspects of the economy, CEO confidence is moving slowly in the right direction. “Things are still very tough, and the road ahead will be bumpy, but everything we see points to steady improvement, albeit very slowly.” 

For the second consecutive month, the Future Confidence Index, which measures the outlook on employment, economic and capital spending opportunities over the next quarter, is higher than the current confidence, indicating that CEOs think business conditions will continue to improve in coming quarters. The Future Confidence Index increased 10.2 points (9.2%) to 110.3. A rosy view of the future was a common thread in CEO comments, although the timing of a return to normalcy remains questionable. One CEO stated, “Q1 will start to show improvement, but not significant until later in the year.” Another CEO simply stated, “I’m upbeat for the future.” 

The Investment Confidence Index rose 3.3 (3.2%) to 104.4. Access to capital remains a challenge for many CEOs. “Financing is still extremely difficult to get,” said one CEO. Another CEO stated, “Investment in technology will grow.” 

The Business Conditions Index increased 8.6 points (9.0%), rising to 95.1, reaching its highest point since September, 2008, when the economy began its freefall. Many CEOs have positioned their companies for the rebound. One stated, “This is an opportune time to grab traction and momentum.” 

While many challenges to a full economic recovery remain, the sentiment in the executive suite appears to have turned the corner. Many CEOs have streamlined costs and made critical investments in their companies, and they are now in position to reap the benefits. One CEO stated, “We see very high potential for 2010 for our business.” Another CEO echoed, “Our firm will have a banner year…”

CEO Confidence Index, January, 2010
Respondents:  652

Index

December, 2009

January, 2010

Monthly Change(%)

CEO Index

85.4

92.6

7.8%

Current Confidence Index

63.6

66.4

4.2%

Future Confidence Index

100.1

110.3

9.2%

Business Condition Index

86.5

95.1

9.0%

Invest Confidence Index

101.1

104.4

3.2%

Employment Confidence Index

63.6

74.5

14.6%

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