Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, rose in May. The CEO Confidence Index rose 15.6 points to 109.9 — a gain of 14.2%.
The Current Confidence Index had the largest percentage gain, rising 24.4% to 86.9. Nearly 60% of CEOs forecast slow, continual growth in the economy.
“We generally feel that the overall recovery will be gradual with some sectors growing faster than others, mostly dependant on government actions,” one CEO told Chief Executive.
The Employment Confidence Index rose 21.5 to 104.1, a gain of 20.7%. The gains in the employment confidence index show a decrease in pessimism, not an increase in optimism. CEOs rating employment conditions as “bad” decreased from 90.6% in April to 76.5% in May, while CEOs rating the employment conditions “normal” rose from 5.1% in April to 18.2% in May.
The Business Condition Index gained 13.2%, rising to 119.2. The gain in this index reflects less pessimism, not an improvement in business conditions — 55.6% of CEOs rated business conditions as “bad,” an improvement from 74.5% in April. Only 10.5% of CEOs rated current conditions as “good” while 33.8% rated current conditions “normal.”
The Investment Confidence Index rose to 106.2, gaining 10.5%. Some CEOs are seizing the moment with strategic acquisitions; one CEO commented, “We still believe that the hobbled U.S. economy makes this an excellent time to acquire additional companies. We are negotiating for another acquisition right now.”
The Future Confidence Index increased 9.6%, rising to 125.4. A cautious optimism seems to be the favored sentiment, but global concerns could disrupt the recovery.
While the recovery is gaining steam, there remain a number of concerns.
“The current bump in GDP will not last… The other shoe has yet to fall concerning home loans and defaults,” stated one CEO. Added another CEO, “We’re likely to see the economy pick up in the next quarter, but the global situation could reverse the improvement trend. All said, we may see some quarterly growth the next few quarters, but watch out for the real devil behind the scenes.”
CEO Confidence Index, May, 2010
Current Confidence Index
Future Confidence Index
Business Condition Index
Invest Confidence Index
Employment Confidence Index