Categories: CEO Confidence Index

CEOs Expect Higher Revenues, Lower Profits in May 2012

The CEO Confidence Index, our monthly gauge of CEO expectations for the future of business conditions rose 1.7% in May to 5.96 out of a possible 10. This increase in expectations comes after a decline in CEO confidence in both March and April. The Index is up 3% for the year.

The number of CEOs expecting to see increased revenues over the next year increased almost 5% in May to 74.1%, but the number of CEOs expecting to see increased profits declined by as much to 59.6%.

One CEO said, “While I see opportunity for revenue growth, which is encouraging, the pressure from large OEMs (original equipment manufacturers) is greater. The pressures for cost reductions is high in spite of continual material price increases.”

Another said, “Company growth in revenue and profitability over the next year needs to primarily come from adding new customers (taking market share from larger competitors) as opposed to from the general economy that continues to grow very slowly.”

So, CEOs hope for growth, but that growth doesn’t look like it’s coming directly from the overall business conditions in the U.S.

The number of CEOs expecting to grow their workforce over the next year, however, has increased since April, jumping from 42.5% to 49.2%.

Gary Minor, Executive Director of the 21st Century Leadership Institute told Chief Executive, “Current employees are at peak capacity; pushing them any harder will lead to less, not more productivity. As a consequence, it is time to start hiring again and that trend is heading up. We are seeing companies once again, believe that investing in their people, both current and new employees, is a wise decision for the first time since Q4 2008.”

As we’ve seen for quite a while, there are still continuing concerns about politicians’ impact on the economic climate and many CEOs are anxious for the November elections.

CEO Confidence Index — May 2012

Respondents: 244

	April 2012	May 2012	Monthly Change
CEO Confidence Index	5.86	5.96	1.7%

What do you expect overall business conditions to be like one year from now on a 1 -10 scale? (10 = Excellent)

What is your assessment of current overall business conditions on a 1-10 scale? (10 = Excellent)

Over the next 12 months, what changes do you forecast for your firm compared to the past 12 months?

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