CEO Confidence Index November 2007
Confidence at LevelsNot Seen Since Start of Iraq War
Sluggish Hiring Environment Expected to Last Throughout 2008
December 5 2007 by Chief Executive
Chief Executive magazine today announced the results of its monthly “CEO Confidence Index,” which measures C-suite confidence in various aspects of the economy from hiring to investing to the overall business climate. In November, the Index continued its precipitous and unprecedented decline for the fourth consecutive month, sinking to 114.6 points, the lowest it’s been since May of 2003, two months after the
All of the component indices, which track various fundamental elements of the economy from employment to investment to current vs. future confidence, fell in November, suggesting that the perceived weakness in the economy is spread across many sectors and that many CEOs to believe that a recession is likely in the near future.
The Business Conditions Index experienced the sharpest decline this month, dropping by 19.4 points to 117.9. In July, the same index was at 184.1.
Russ Bianchi, CEO of Adept Solutions, Inc. attributed the overall decline in business conditions confidence to “the weakening U.S. dollar (against the Euro and BPS), plummeting domestic
However, some CEOs were astute to point out the possible benefits of the continued weakness of the U.S. dollar. Steve Townes, CEO of Ranger Aerospace, commenting on the investment environment, said, “Now is an excellent time to be a well-capitalized buyer, when others are faltering in this challenging economy.”
Sporadic capital inflow benefits notwithstanding, CEOs are overwhelmingly pessimistic about the current economic environment. Only 16 percent of respondents said they expect hiring to increase over the next quarter, compared to 41 percent who expect a drop, and 43 percent who feel at best no change will occur.
Edward M. Kopko, CEO and publisher of Chief Executive magazine said, “CEOs have been clear over the past several months that they are worried about the economic climate. The recent dramatic drop in confidence may suggest that the worst is yet to come.”
To better understand the impact that the current climate will have on the future of the American labor market vis-a-vis foreign competitiveness, Chief Executive conducted additional polling this month on longer-term hiring prospects CEOs are facing. When asked how the current weakness in energy prices, the value of the dollar, and the credit markets are impacting their
CEOs were also asked about the prospects they face in hiring foreign labor versus domestic labor. While almost half of CEOs (44.3 percent) said they do not hire outside the U.S., for those who do, the trend is clear: CEOs are moving labor outside the U.S. at a rate of about three times as fast as those who are moving labor back to America (for more complete results, see below). They cited the cost benefits and the proximity of labor to growth markets as the top two reasons supporting this trend. One respondent, who asked to remain anonymous, pointed out additional concerns with the
CEO Index, November 2007
|Current Confidence Index|
|Future Confidence Index|
|Business Condition Index|
|Invest Confidence Index|
|Employment Confidence Index|
How have the changes in energy prices, the declining value of the dollar, and the tightening of the credit markets impacted your
|Reduced Hiring Plans|
|Increased Hiring Plans|
How will you utilize foreign labor markets to supplement or meet your labor needs for 2008 versus 2007, either directly or through outsourcing opportunities?
|More than in 2007|
|Less than in 2007|
| We do not hire outside the |
If you are making use of offshoring opportunities, what are your reasons for doing so?
|Business logistics (e.g. proximity to growth markets)|
|Regionally specific skill sets needed|
|Tightening of domestic labor market|
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Recent coverage: Pessimism Is Growing in Executive Suites,
Floyd Norris, The New York Times,