CEO Confidence Turns Positive
All five components of the CEO Confidence Index showed gains ranging from 6.9% to 15.9%. The individual components of the CEO Confidence Index fluctuated in November, reflecting continued uncertainty in the business environment. Surprisingly, the component that showed the largest percentage gain in December was the Employment Confidence Index.
The Employment Confidence Index has been the worst performing component of the index, reflecting the highest unemployment rate since 1982. The Employment Confidence Index rose 15.9% to 63.6 in December. While an improvement, the high unemployment rate remains a hurdle to full recovery. One CEO commented, “The job market is extremely depressed right now.” Another CEO added, “I think we are several quarters away from companies beginning to rehire”. Many CEOs are taking advantage of the skilled labor pool, and making strategic hires. Many CEOs commented on the wide availability of skilled labor, “The talent pipeline is rich for those willing to make appropriate trade-offs or investments.” The Employment Confidence Index is an early indicator of changes in the employment rate 6 months in the future.
The Current Confidence Index showed a gain of 8 points (12.6%), rising to 63.6. This increase reflects more of a stabilization than an improvement, offsetting November’s loss of 12.2 points. The President of one Midwest firm stated, “Isolated markets and segments are improving. There is no consistency in the growth company-wide, or over time yet.”
The Investment Confidence Index gained 11.2 points (11.1%), recovering from November’s loss of 8.7 points. The increase raises the Investment Confidence Index to 101.1 points. CEO investment sentiment is similar to their hiring sentiment. One CEO told Chief Executive, “We are hiring and investing strategically. While we are continuing to improve wages and benefits to our current employees, we are doing so under tight controls”.
The Future Confidence Index increased 10% to 100.1 points. Many CEOs see conditions improving, but are cautious in predicting the timeline. One CEO commented, “I think we are several quarters away from companies beginning to rehire”. Another CEO provided a similar sentiment, “I don't see things improving until summer at best”.
The Business Conditions Index showed the smallest percentage gains, rising 6 points (6.9%) to 86.5. This reflects the current high unemployment rate, and the lack of access to capital business leaders continue to face. While many believe the worst is behind us, uncertainty remains strong. One CEO stated poignantly, “We continue to see a very challenging operating environment”.
Perhaps the economy has passed the low point and is beginning to recover. Certainly, there remain many hurdles to be overcome, but a change seems to be in the air. One CEOs comments provided a ray of hope, “While not entirely reflected in indices, there appears to be a much more positive attitude and expectation of better times ahead”.
CEO Confidence Index, December, 2009
CEO Index 76.2 85.4 10.8%
Current Confidence Index 55.6 63.6 12.6%
Future Confidence Index 90.1 100.1 10.0%
Business Condition Index 80.5 86.50 6.9%
Invest Confidence Index 89.9 101.1 11.1%
Employment Confidence Index 53.5 63.6 15.9%
About Chief Executive magazine
Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 220,000. Chief Executive Group facilitates "Chief Executive of the Year," a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. Jim Skinner, Anne Mulcahy, Bob Ulrich, A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award's 24-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers. Visit www.chiefexecutive.net for more information.
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