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CEO Optimism Continues To Rise In September

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After months of continuous decline, Chief Executive’s leading indicator of CEO sentiment rose for a second consecutive month in September—adding another 2 percent to August’s 14 percent rebound.

America’s business chiefs are anticipating a late-2023 recovery, which many expect will put an end to supply chain woes, labor shortages, interest rate hikes and, of course, record-high inflation. The kick-off for all this? November’s midterm elections, many project.

Chief Executive’s CEO Confidence Index, which gauges CEO sentiment for business 12 months out, rose 2 percent in early September, after soaring 14 percent in August. This is the second consecutive uptick since the onset of the war in Ukraine earlier this year.

CEOs, who were polled September 6-8, say that while there remains a high probability of a recession, most expect it to be short-lived. Many are basing their outlook for the next 12 months on their projection for the upcoming midterm elections, continued strength in consumer demand and indications that supply chains will have eased by this time next year—along with the Fed’s interest rate hikes.

The CEO of a biotech company participating in the poll said his forecast for improving conditions was rooted in “optimism that supply chain issues resolve, Ukraine/Russia war is resolved and business across the globe improves, and inflation is moderated without spiking interest rates too high from here,” he said.

He was echoed by several others who based their rating on the midterm elections being behind us, the Fed’s tightening policy being over, the rebalancing of the labor market dynamics and the energy crisis having stabilized.

More specifically: “A new direction in government after fall elections, less job availability that will force people back to work, [and a] smaller-than-predicted recession,” are the reasons given by the CEO of a real estate company to explain his forecast of 8 out of 10 for business conditions in the U.S. by this time next year.

Many of the 153 CEOs polled also reported strong consumer spending in spite of inflation and higher interest rates. In fact, the majority (55 percent) say demand is up from where it was last year—and the same proportion expect it to continue to increase over the coming months.

“We have the highest order book in our history. We are adding equipment and personnel to grow our production capacities and capabilities,” said Scott Glaze, CEO of wire manufacturer Fort Wayne Metals, who rates future business conditions a perfect 10 out of 10.

“There still seems to be demand and a serious effort at reshoring, which I believe will cause manufacturing to grow,” said the CEO of an industrial manufacturer who is betting big on technology and automation to meet that demand.

“Demand is holding up, and we are seeing some easing of inflationary pressures on the supply chain and raw materials side,” said Will Symonds, president of global houseware company OGGI.

“Market demand is still fairly strong,” said Scott McQuinn, president and CEO of healthcare nonprofit Life Enriching Communities, adding that he’s fairly confident price increases will remain in place, thus supporting business growth.

One CEO in the retail space warns, however: “Be careful about being misled with the strong demand centers. Many are being driven by inflation, which is not sustainable, and/or pent-up pandemic demand, which is not sustainable. Take a look at apparel retail; it was hot due to pent-up demand and is collapsing quickly.

One of the most pressing obstacles to meeting that demand, CEOs say, is labor. Overall, 62 percent of CEOs surveyed say labor costs/availability is the one external factor bearing the most significant influence on their 2023 strategy—ahead of supply chains and consumer demand turning due to rising rates.

But many of them also expect that pressure to begin easing, as unemployment rate rises, “which will ease/plateau labor costs,” said the CEO of a large construction company.

“I feel the Fed will continue to be aggressive on inflation, which will temper some on the revenues side, but it will likely help ease labor pressure, which I see as the most impactful business concern currently,” said Mark Rubenstein, CEO of hospitality service provider A Head for Profits.

“We see an overall normalization of sales, with the labor market constantly changing,” said the owner of a mid-sized retailer who expects demand to increase in 2023. “There will be churn in the labor market, with many companies looking to reposition their labor force and move on from dead weight, but there will also be many new positions created.”

Growing Optimism

For now, CEOs’ confidence in businesses’ ability to thrive under current conditions remains in “Good” territory, at 6.1 on our 10-point scale where 10 is Excellent and 1 is Poor—from 6.2 in August.

Both current and future indicators are down double digits since the beginning of the year, but the proportion of CEOs who expect conditions to continue improving over the year ahead has been increasing for two consecutive months. It is now at 32 percent, up only 2 percentage points since August but up 131 percent since the July trough.

“We are mildly optimistic about where we will be in the next 12 months,” said David Kroutil, CEO of Advantage Route Systems, who expects to see 20 percent growth thanks to new products.

The uptrend has also been observed across senior leadership teams, with 36 percent of CFOs projecting improvements in business conditions by this time next year (up from 31 percent), as well as 33 percent of board members (up from 20 percent) and 41 percent of CIOs (up from 39 percent) who reported similar forecasts in August, when we last polled them.

Perhaps as important to note is the decreasing proportion of C-Suite executives who anticipate conditions to worsen: 39 percent of CEOs (down from 45 percent in August), 40 percent of CFOs (down from 48 percent) and 41 percent of board members (down from 56 percent). The only group where the number has gone up is among CIOs, where 31 percent now expect things to be worse in the second half of 2023 (up from 26 percent in previous poll).

The Year Ahead

Based on their outlook for the coming year, 65 percent of CEOs report being forced to walk that fine line between cost-containment and growth. Two-thirds say the most probable course of action for their company will be to keep a close eye on spending, while 50 percent say they intend to increase prices further.

Scott Mallory, CEO of golf car parts manufacturer and distributor JBI Interiors, says it’s important for business leaders to “continue to focus on profitable business,” he said. “[It’s] not a time to take market share over profits.”

William Wilhelm, president of RD Olson Construction, agrees that caution is warranted but still keeps an eye on the recovery. “Cash is king, but don’t be afraid to invest for the upside,” he said.

“The upside potential is great,” echoed another CEO and mid-sized retail business owner participating in the survey, “so long as you have cash to weather the storms, which are sure to come along next year.” He nevertheless says this is a great time to be strategic in acquisitions. “Don’t be afraid to take advantage of opportunities, so long as you are not taking on large amounts of debt in the process.”

CEOs are optimistic that the efforts put into navigating the current environment will pay off. Fifty-six percent expect profit margins to be up by this time next year, and 72 percent expect revenues to grow over that same period. Those proportions are up 7 and 13 percent, respectively, since August.

Despite all the talk about layoffs, only 17 percent of CEOs say they expect to make workforce reductions in the year ahead. In fact, 46 percent are staying the course with their intent to increase hiring over the next 12 months—unchanged for the past three months.

Finally, 41 percent also plan to increase capital expenditures in 2023, a 10 percent jump from 38 percent the month prior.

Sector & Size View

Looking at confidence across industries, the data reveals significant variations. Retail CEOs, for instance, show a 29 percent uptick in optimism for 2023 month-over-month, though the index is down 3 percent from where it was at this time last year. CEOs in that sector say demand is fueling optimism and that they are seeing indicators that inflation may be slowing.

At the other end of the scale, Pharma CEOs report a 15 percent loss of optimism since August, and their rating is 22 percent lower than the one they had reported at this time last year. They say unresolved labor and supply chain issues continue to weigh heavily on their forecast, alongside rising interest rates and a decrease in discretionary spending in their sector.

In the advertising space, CEO confidence also shows a considerable decline year-over-year (down 35 percent)—and a 7 percent drop from August levels. Rising costs of goods and a still-cautious business environment is slowing sales and hurting revenues, CEOs operating in that sector say.

Professional services CEOs and industrial manufacturers are both reporting increases in optimism compared to the month prior—up 18 and 12 percent respectively. Relative to confidence this time last year, however, both are down (6 and 1 percent).

Looking at confidence by company size (by annual company revenue), there were few variations in September, compared to August, except for small company CEOs (less than $10M) whose optimism grew by 6 percent—the largest increase of the peer groups. Despite that, CEOs in that group say while a lot is being done to taper inflation and restore economic growth, little is done to support small businesses specifically.

“Rising interest rates and strong labor shortage are just pushing everything down. No one is really doing much to help small business succeed,” said the CEO of a professional services firm in the South Atlantic. “Taxes and audits are sure to go up, as the government is looking to get money from small business and perceived wealth that will slow growth and investment. Only positive is the drive to succeed in small businesses through hard work and determination not to fail.”

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


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