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The CEO Confidence Index Jumps 3.9% in June, but CEOs Remain Skeptical and Cautious During Tepid Economic Recovery

The CEO Confidence Index, Chief Executive’s monthly gauge of CEOs’ expectations for business conditions over the next 12 months, rose 3.9% in June to 6.09 out of a possible 10. This is the highest rating the Confidence Index has seen since May of 2011, when the measure was also 6.09.

The CEO Confidence Index, Chief Executive’s monthly gauge of CEOs’ expectations for business conditions over the next 12 months, rose 3.9% in June to 6.09 out of a possible 10. This is the highest rating the Confidence Index has seen since May of 2011, when the measure was also 6.09. The Current Confidence Index, which measures CEOs’ perceptions of current business conditions, also rose in June to 5.66 out of a possible 10. That is a 3.6% increase from the previous month.

The Confidence Index rating did not vary much by company size. In fact, CEOs of companies with less than $10 million in annual revenue gave the identical rating for future business conditions, 6.08, as for CEOs of companies with between $10 and $100 million in revenue. For companies with greater than $100 million in annual revenue, the rating was just slightly higher at 6.10.

The Current Confidence Index saw more significant differences by company size, with the smallest company CEOs (companies with less than $10 million in revenue) actually having the greatest confidence in current conditions with a rating of 5.78. CEOs of companies with $10 to $100 million in revenue gave a rating of 5.68, and CEOs of the largest companies provided the lowest rating at 5.55.

Comments from our CEO respondents show a mix of strong concern in the economy and cautious optimism. None of the CEOs who responded to our survey were starkly positive in their assessments of their businesses and the overall economy.

One CEO of a middle-market industrial manufacturing company provided this overview of his company’s conditions: “Our USA outlook continues to be a concern, primarily due to the same reason as a number of years ago: uncertainty. It is not uncertainty about demand or revenues, but due to regulations, healthcare costs, taxes and trade policy. As an example, last year our business was up 8%. We could have hired 5% more employees, but instead we paid overtime. We could have invested more in capital equipment, but we paid down debt. We could have upgraded our facilities, but instead did repairs. Instead of increasing production on lower margin products, we have outsourced them to overseas partners, keeping the costs at the variable line. This thought process has been going on for so long, it has become the new normal.”

The themes of anger toward government inaction as well as the burden of the Affordable Care Act were common in the comments we received. “International markets are much weaker than expected and the lingering inability of the White House and Congress to make progress on budgets and fiscal austerity causes the general economy to remain stagnant. Companies must also bear the burden of Obamacare, which is becoming much more expensive and intrusive than anyone had expected,” said the CEO of a manufacturing company.

Despite the pessimism and concerns about the current and future state of the economy, 67.1% of CEOs are expecting their companies’ revenues to increase over the next year, and 59.6% expect profit growth as well. In a trend we’ve seen over the past several years, despite growth on the top and bottom line, only 43.8% of CEOs expect their number of employees to grow over the next 12 months. Similarly, only 44.1% expect an increase in capital expenditures.

CEO Confidence Index — June 2013

Respondents: 179

May 2013 June 2013 Monthly Change
CEO Confidence Index 5.86 6.09 3.9%


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