CEO Confidence Down in 2Q - Modern Distribution Management

CEO Confidence Down in 2Q

Measure of CEO Confidence drops sharply after reaching "highest level in nearly six years."

The Conference Board Measure of CEO Confidence, which had increased to prerecession highs in the first quarter, declined in the second quarter of 2017. The measure now reads 61, down from 68 in the first quarter (a reading of more than 50 points reflects more positive than negative responses).

“CEO Confidence declined in Q2, but sentiment about the overall economy remains positive,” said Lynn Franco, director of economic indicators at The Conference Board. “CEOs are optimistic about the growth prospects for both mature and emerging economies, but expectations for Brazil have shifted from positive to neutral. Seven out of 10 CEOs expect profits will increase over the coming year, with market/demand growth and cost reductions the major driving forces.”

CEOs’ appraisal of current economic conditions waned, with 60 percent saying conditions were better compared to six months ago, down from 71 percent in the first quarter. Business leaders were also less positive in their appraisal of current conditions in their own industries. Now, just 47 percent say conditions in their own industries have improved, down from 60 percent last quarter.

Looking ahead, CEOs’ optimism regarding the short-term outlook for the economy moderated due to a greater percentage expressing a “more of the same” sentiment as opposed to foreseeing conditions worsening. Currently, 41 percent expect economic conditions to improve over the next six months, compared to approximately 65 percent last quarter. The outlook for their own industries was also less favorable, with 48 percent of CEOs anticipating an improvement over the next six months, down from 67 percent in the first quarter of this year.

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