The new year often brings renewed hope for the future, so does Chief Executive’s first CEO Confidence Index of the year. Our latest survey finds CEOs starting the year with improving ratings of both current business conditions and future business conditions in 2024.
After an 8 percent climb in December, the 176 CEOs polled January 9-11 as part of our monthly reading of CEO confidence in the economy boosted their outlook for 12 months from now another 2 percent. At 6.5 out of 10, where 10 is Excellent and 1 is Poor, the January 2024 reading is the sunniest outlook CEOs have had since March of 2022—right around when Russia invaded Ukraine.
Not only are America’s business chiefs gaining optimism for future conditions, but they are growing more confident in present as well. CEOs’ rating of current business conditions ticked up another 1 percent in January to 6.2 out of 10, after a 7 percent climb in December.
High rates of inflation and soaring interest rates kept CEO confidence low throughout most of the 2023. Now, many expect lower rates in 2024 and are encouraged by stable inflation. CEOs say they also expect an election year boost and increased consumer confidence, fueling consumer spending. Some even dare to say a soft landing has been achieved and the economy will pick up again by the end of 2024.
“Stabilization of inflation (between 2-3%). Modest softening of labor demand. “Normalization” of interest rates. Moderation of regulatory agenda,” lists Stephen Beard, CEO of Adtalem Global Education Inc., a large public company, as reasons why he expects conditions to improve from a 6 to an 8.
“I’m seeing improvement in buyer openness, and a new willingness to invest in business transformation. We’re not out of the woods, but we’re in a better place than we were last month,” says Dr. Matt Brubaker, Chairman and CEO of FMG Leading, a mid-size professional services firm.
Dr. Brubaker expects conditions will improve from a 6 to a 7 twelve months down the line—and a high proportion of CEOs agree that the future is bright, at least brighter than the present. At 46 percent, the proportion of CEOs who project improving business conditions over the next 12 months is the highest since April of 2021—before multiple new Covid waves, wars, bank collapses, etc.
Even though Terry Moody, CEO of Altor Solutions, an upper-mid size packaging, insulation and componentry manufacturing firm, is cautious, he expects conditions to improve from a 6 now to an 8 one year down the line. The “election year will pass, and many re-shoring and friend-shoring efforts will be completed and operated in the NA. PMI is in the upper 40s, indicating steady production for 2024, but it is a year to watch. We are still within the conditions for a recession.”
Only 26 percent of CEOs expect conditions to worsen—the lowest proportion since January of 2022.
THE YEAR AHEAD
In a continued positive streak from last month, a higher proportion of CEOs are also projecting growth over the next 12 months across profits, revenues and hiring in the new year.
Some 66 percent of CEOs we polled are now projecting profit growth over the next 12 months, a 5 percent boost from last month.
The proportion of CEOs projecting revenue growth over 2024 also ticked up from last month to 75 percent, a 3 percent increase over December numbers.
The proportion of CEOs planning increases in capex over the next 12 months fell after a massive boost the prior month, dropping from 49 percent in December to 43 percent in January—a strong forecast nonetheless.
After two months of consecutive climbs, the proportion of CEOs planning increases in hiring ticked up another 9 percent, to 48 percent. Although, 35 percent of CEOs plan to increase hiring by less than 10 percent.
Even with a drop in the proportion of CEOs planning increases in capex, the overall sentiment remains strong for business conditions in the year ahead.
About the CEO Confidence Index
The CEO Confidence Index is America’s largest monthly survey of chief executives. Each month, Chief Executive surveys CEOs across America, at organizations of all types and sizes, to compile our CEO Confidence Index data. The Index tracks confidence in current and future business environments, based on CEOs’ observations of various economic and business components. For additional information about the Index and prior months data, visit ChiefExecutive.net/category/CEO-Confidence-Index/