CEO Confidence Index June 2009

CEOs Still Wary About Current Business Conditions; Nearly Half Report Salary and Hiring Freezes, While 30 Percent Plan Further Layoffs

July 1 2009 by ChiefExecutive.net


Chief Executive magazine’s CEO Index, the nation’s only monthly CEO Index, fell 2 percent or 1.4 points, to 74.3 points in June 2009, after three consecutive months of incremental increases, underscoring the uncertainty amongst the 227 CEOs polled in June. 

All component indices of the CEO Index declined in June, with the only exception of Future Confidence and Business Conditions Indices. The largest drop was witnessed in the Current Confidence Index, which plunged 11 percent to 62.8 points.

“The shift in CEO sentiment – albeit slight – points to the continued volatility in market conditions,” said JP Donlon, Editor-in-Chief of Chief Executive magazine. “The mixed signals in the economy and the continued distress in business conditions are all causing CEOs to be cautious and conservative with current investment and business decisions.”

For the third straight month, the difference between Current and Future Confidence Index, which measures the outlook of employment, economic and capital spending opportunities over the next quarter, continued to widen, underscoring CEOs growing confidence in future conditions, despite the ongoing doubts about current conditions.

In June, the Future Confidence Index increased 3 percent to 82.1 points, its highest level since October 2008, even as the Current Confidence dropped. Tom Nora, Chairman, Darwin Falls Partners LLC, said, “CEO confidence will begin to increase soon, catalyzing the actual turnaround in 2010.”

In additional polling this month, CEOs were asked about the current state of their employment and compensation practices. Forty-five percent of CEOs said they have put a freeze on hiring, while 47 percent said they had a freeze on salary increases. Only 24 percent of CEOs polled said their companies were still hiring and only 25 percent said they are moving forward with salary and bonus increases. Worse yet, 30 percent of CEOs said they are contemplating further layoffs.

CEO Index, June 2009
Respondents: 277

Index

May,2009

June,2009

Monthly Change

CEO Index

75.7

74.3

-1.4

Current Confidence Index

69.6

62.8

-6.8

Future Confidence Index

79.8

82.1

2.3

Business Condition Index

68.3

69.2

0.9

Invest Confidence Index

100.4

96.8

-3.6

Employment Confidence Index

51.8

50.9

-0.9

What is your company’s current employment position?

Reducing Head count

70

30.57%

Hiring Freeze

105

45.85%

Hiring

54

23.58%

* Total Responses : 229

 

 

What is your company’s current position on compensation?

Normal salary and bonus increases

57

24.89%

Salary freezes

109

47.60%

Reductions to compensation and other cuts

56

24.45%

* Total Responses : 222