Most telling, more companies say they are ready to plow money back into their businesses, “inspired largely by the strengthening U.S. economy, as well as pressure from long-term investors,” The Wall Street Journal reported.
CEOs and business owners will have to decide over the next three to six months whether they believe the business cycle finally has reached a tipping point that will justify more liberal company outlays. Though the U.S. economy formally has been growing for five years now, many have kept their purse strings clutched because the magnitude of growth has been anemic so far.
More growth sprouts are indeed cropping up every day now. For example, a new survey shows 61 percent of corporate economists say their firms will likely increase capital spending in the next year. That’s up from an average 52 percent in the past four quarterly surveys by the National Association of Business Economics.
And stock analysts expect capital spending to climb 6 percent this year, according to market-data provider FactSet, after rising only about 1 percent last year and potentially ending a several-year slump as chiefs kept their powder dry waiting for economic improvement.
Meanwhile, banks are boosting their lending to businesses, providing fuel for companies to increase spending on workers and equipment, the WSJ observed.
Sales at chain restaurants are also rebounding. They long have been a reliable reflection of the overall financial mood and spending patterns of American consumers. Same-store sales as recorded by Black Box Intelligence rose by 0.7 percent in March after year-on-year declines from November 2013 through February 2014.
“There was significant pent-up demand in consumers for incremental spending in restaurants, but that demand continued to be restricted by the weather” through the harsh winter in most of the United States, a Black Box analyst said.
All these factors have directly lead to an increase in CEOs’ confidence. Chief Executive magazine’s CEO Confidence Index jumped 5.4% in May—the highest in three years. Meanwhile, Duke University/CFO magazine’s snapshot of CFO confidence also showed an uptick, with the magazine’s index of expectations rising three points higher than at 2013 year-end, to 60 out of 100.
Business leaders are not jumping in with both feet, however. There is a continued hesitance of about the future of the economy and they are taking a wait-and-see attitude regarding spending. “Until I see data that my business is going to improve, I’m not going to believe what I read in the papers and go to the bank with it,” Darin Holderness, corporate controller at $500-million woodmaker Woodgrain Millwork, told CFO.
While cautious optimism is in season, these numbers show a more attractive picture than in recent years.
Additional reading:
Sluggish Economic Recovery Proves Resilient
Business Investment Outlook Brightens
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
0
1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
