After rising in the first quarter, The Conference Board Measure of CEO Confidence retreated sharply in the second quarter to 55, down 12 points from 67. While still above 50, which reflects a more positive than negative outlook, the reading seems to indicate chief executive officers are bracing for slower growth.
“CEO confidence cooled considerably in the second quarter, a reflection of a sluggish U.S. economy,” said Lynn Franco, director of
CEOs’ assessment of current economic conditions was much more pessimistic than last quarter, with only 33% saying conditions are better compared to six months ago, down from 85% in the first quarter. CEOs are also less optimistic about their own industries, with only 40% saying conditions have improved, down from 61%.
CEOs’ optimism about the foreseeable future in the next six months also deteriorated, with 43% expecting an improvement in economic conditions in the next six months, down from 66% in the first quarter. Expectations for their own industries in the short term are also dour, with 44% expecting conditions to improve, compared to 49% in the first quarter.
Nonetheless, 70% of chief executive officers expect profits to increase in the next 12 months. Those in the durable goods industry are the most optimistic, with 74% expecting profits to increase. Among those in the non-durable goods and service industries, 66% expect profits to rise.
Among those executives who expect profits to rise, 57% say it will be due to market demand/growth, 20% say it will be due to cost reductions and 20% say it will be due to price increases. Three percent say growth will be due to new technology.
