CFO Confidence At Highest Level Since Before Recession

Optimism among chief financial officers in the US has increased, rising to its highest level since early 2007, according to the most recent Duke University/CFO Magazine Global Business Outlook Survey.

The quarterly survey, which concluded March 3, found that most of the 854 CFO polled expect robust growth in earnings (18 percent) and capital spending (12 percent), while overall employment moves forward, as well, albeit more slowly.

Here are a few additional key findings from the research:

More than half (56 percent) of US CFOs saying their optimism has increased this quarter. By comparison, 39 percent of European CFOs say they are more optimistic, while 65 percent of Asian CFOs are more optimistic.

Dividends will soar by 14 percent, the largest quarterly increase in the 15-year history of the survey.

Employment growth will be modest (1.2 percent) overall. However, some industries identify a need to hire skilled workers in engineering, product development, information technology, finance and accounting, and sales.

Inflation concerns have increased. CFOs who say an increase in inflation would affect their business estimate that inflation of 4 percent would cut earnings growth in half.

More than one-third (39 percent) of companies find borrowing conditions have improved compared to fall 2009. The smallest firms (revenue under $100 million) say credit is still tight.
37 percent of companies say they have already returned to pre-recession levels, while one in five firms says they will never return to previous employment levels. Another 43 percent say they will eventually return to pre-recession employment levels, but not until sales revenue increases by another 40 percent.

36 percent of US. companies say they will acquire another firm or part of another firm during the next year. Mergers and acquisition activity should be about the same in Asia, but even more robust in Europe, where 42 percent of firms plan to make acquisitions.

The Duke University/CFO Magazine Global Business Outlook Survey has been conducted for 60 consecutive quarters, making it one of the world's most comprehensive and longest-running surveys of senior finance executives. The latest results suggest that the economy may be turning a corner, provided inflation remains at manageable levels.

"Increasing optimism is good news for the US economy going forward," John Graham, professor of finance at Duke's Fuqua School of Business and director of the survey, said in a press release. "Historically, we have found that increases in optimism lead to stronger GDP growth, spending and employment within a year."

TAGS: Finance
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