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CEO Confidence Index November 2006

Extreme Current Optimism Is Offset By Bearish Future Expectations Executives Rate Finding Talent, Growing Revenue, & Healthcare as Top 2007 Issues

 Click the image to see Ed Kopko on CNBC

Employment Confidence IndexRallying with strong stock market performance, the Chief Executive CEO Confidence Index rose for the second consecutive month, according to 223 top executives surveyed. The Index rose by 2.4 points to 159.2. Polling was conducted during the election cycle.

Positive developments in the current business environment, like lower oil prices and signs of slowing inflation, caused CEOs to be especially confident about the current climate. The Current Confidence was the top-performing sub-index, skyrocketing by 15.1 points to 210.1 Over half of the executives polled (54.3%) rated current business conditions as “good,” the highest portion to do so in six months. Additionally 57.4% of respondents rated current employment conditions as “good,” the most bullish position on current employment since the inception of the index in 2002. Buoyed by these positive sentiments, the Employment Confidence sub-index also performed well, rising by 13.3 to 177.6.

Though CEOs voiced positive sentiment over the current environment, their forecast for the future was less optimistic. 22.2% of respondents expect hiring to decrease in the next quarter, and 15.8% of respondents expect gradual decline in the economy in the coming quarter. Said one respondent polled before the election, “I think the current economic condition is being managed for the election next week. I see a possible slowdown 1st and 2nd quarter next year.” Poor future expectations, combined with strong current sentiments, caused the difference between current and future to skyrocket by over 20 points. It is currently at a 85.2 point differential, it’s highest level ever. “CEOs are pleased that the economy is creating opportunities for growth,” said Edward M. Kopko, CEO of Chief Executive Group. “However, they are worried about taking these good developments for granted.”

Chief Executive Group also conducted additional polling this month, asking CEOs about their perceived business hurdles for 2007. They were given the option to voice their top 3 concerns from a list of options (see below for full results). CEOs rated bread and butter business issues as the most important; CEOs said their greatest 3 concerns were attracting and developing talented people, top line revenue growth, and healthcare.

Many CEOs elaborated on their concerns. Norm Silverstein, President & CEO of the WXXI Public Broadcasting Council, said adapting to business changing needs “is like learning to juggle… except what you are juggling is constantly changing.” Richard A Russack of the BNSF Railway Company worried that “[h]ealthcare options are too varied, costs too high, and national reform is required.” Tim Koltek, CEO of Terrapin Energy, put it simply: ” Retaining key talent is the key.”

The CEO Confidence Index normally is released on the third Tuesday of each month.  For additional information regarding the confidence of public- and private-company CEOs, details about regional CEO attitudes on employment, investment and business conditions, as well as confidence differences between service and non-service industry CEOs, visit our full report at http://www.chiefexecutive.net/ceoindex.

Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 170,000.  Chief Executive Group facilitates “Chief Executive of the Year,” a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers.  A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award’s 20-year history.  Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers. 

CEO Index, November 2006

Respondents: 223

 

 Nov-06

 Change from Prev Month

 Ceo Index

 159.2

 2.4

 Current Confidence Index

 210.1

 15.1

 Future Confidence Index

 124.9

 -6.1

 Business Condition Index

 171.3

 -3.1

 Invest Confidence Index

 134.7

 -1.1

 Employment Confidence Index

 177.6

 13.3

 What are your top 3 issues for your business in 2007?
Attracting and Developing Talented People
Top Line Revenue Growth
Healthcare

 List of Options
 Access to capital/ Cost of Capital
 Healthcare
 Foreign Competition
 Attracting and Developing Talented People
 Regulatory and Legal Complexities
 Product Innovation/Introduction
 Top Line Revenue Growth
 Cost Management
 Labor Productivity
 Other

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