CEO Confidence Index September 2004
September 1 2004 by Chief Executive
The Chief Executive CEO Confidence Index dropped 10 full points this month, settling in at 159.7 from a high of 177.4 two months ago. This drop was the second biggest in the history of the Index, only outdone by the 11.2 drop in February, 2003, right before the start of the Iraqi conflict.
In the wake of a sluggish stock market and rising energy prices, executive confidence dropped for the second month in a row. Back in July, the Index dropped 7.7 points. However, executives are still optimistic about business fundamentals like employment, capital spending, and overall business conditions. 89.5% of CEO’s said current business conditions were normal or good, compared to only 33.4% optimism back in the spring of 2003. Similarly, 80.2% of CEO’s felt that employment conditions were normal or good, compared to 36.8% back in spring, 2003, too.
In light of the blossoming political season, this month Chief Executive Magazine conducted additional polling to better understand the issue of job creation. From the poll, CEO’s do not support the tenet that political officeholders fuel job growth. The three most agreed upon reasons affecting job growth, according to 324 CEO’s polled this past month, are expected sales growth (22%), expected profitability (16.8%), and outlook for the economy in general (13.7%). These market fundamentals completely dwarf the bottom two reasons CEO’s listed as affecting job growth. Those reasons are uncertainty about the presidential election (4.3%) and outsourcing (4.6%).
“CEO’s clearly believe that company fundamentals determine job growth, not which candidate wins the November election or how many jobs are outsourced,” says Edward M. Kopko, chairman and CEO of the Chief Executive Group. “Of ten possible reasons, market-related fundamentals were the top three reasons CEO’s listed as affecting job growth, and political issues were the bottom two. The message from CEO’s couldn’t be more clear on this issue.”
The fact that CEO’s explain job growth by the workings of the market is reinforced by the fact that executive confidence in employment has been increasing over the past year. This has translated into the recently reported lows in unemployment rates.
“Although recent months have caused some uncertainty for CEO’s, resulting in the second biggest drop in the history of the CEO Confidence Index, their optimistic outlook seems to be the real headline,” says William J. Holstein, editor-in-chief of Chief Executive magazine. “Their overwhelming faith in current employment and business conditions, as well as their faith in future employment and capital spending conditions really speaks to this fact.”
The CEO Confidence Index 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.
Chief Executive is a controlled circulation magazine that reaches 42,000 chief executive officers and their peers. It is published 10 times a year and reaches a total readership of 143,000. 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. Jack Welch, Bill Gates, John Chambers, Michael Dell, Sandy Weill, Hank Greenberg, and Fred Smith are just some of the leaders who have been honored throughout the award’s 17-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.