The economic recovery hasn’t been the greatest: the unemployment rate remains high, a significant number of job opportunities have been part-time, private companies aren’t making investments and the government continues to be a hindrance to any economic growth.
Nevertheless, even with the negative economic outlook among some, a new quarterly poll of CEOs in the United States has found that the confidence level is at its highest level in more than a year. Is this a signal that there is some stability and growth in the economy after all and a turnaround is possible?
The YPO Global Pulse Confidence Index in the U.S. rose by a little more than one point to 62, the biggest level since April of last year when it was at 65.1, an all-time high at the time. The annual study also discovered important economic indicators that could perhaps benefit all facets of the country.
Close to half (49 percent) of the CEOs noted that business and economic conditions have improved over the past six months, with the construction sector being the most positive (65 percent). Other sectors, meanwhile, such as production and services firms, are also upbeat about the economy.
In addition, the survey found that smaller companies were more likely to be rosy about the economic conditions of the past six months than its larger counterparts.
Over the course of the next six months, more than half of the respondents (51 percent) concurred that the economic conditions would improve by the end of the year, a five-percent increase from the previous quarter. The responses did vary, though, as CEOs of medium-sized businesses were less positive in their outlook for the next six months than large- and small-sized enterprises.
“Earlier in the year there was a fear that the payroll tax increase and mandated federal spending cuts would impact growth in 2013, but those concerns have been mitigated,” said Alan Zafran, managing director of California-based investment adviser Luminous Capital, a division of First Republic Investment Management, and a member of YPO’s Global One Chapter, in a statement. “The primary reassuring factor is the improved housing market, with stock market performance and positive monthly employment numbers also boosting confidence.”
As consumer confidence rises in the U.S., so are the sales expectations among American CEOs. The survey found that participants were more optimistic regarding their sales outlook rather than hiring or capital spending. The majority of CEOs projected sales to increase over the next year with smaller enterprises being the most bullish – the YPO Sales Confidence Index for the U.S. increased by 0.7 point to 66.7.
“With no apparent economic headwinds for the first time in several years and stronger than anticipated economic data, YPO respondents have become slightly more optimistic about their business prospects,” said Stephen Slifer, YPO Global Pulse economic adviser and chief economist at NumberNomics, in a news release.
In the next 12 months, CEOs noted that they foresee additions to staff levels, which gave the YPO Employment Confidence Index a boost of a half-point to 59.7. Production companies were the least likely to hire workers as only one-quarter believe they will do so in this timeframe.
When it comes to employment opportunities in the U.S., a lot of the jobs have become part-time. However, Amazon made headlines Monday when it announced that it was adding 7,000 jobs for its U.S. operations and 5,000 of them will be full-time positions that come with competitive pay and benefits.
Since the economic downturn, the U.S. hasn’t seen many improvements. With the Federal Reserve potentially tapering off its quantitative easing sometime next year, investors are quite concerned because they rely heavily on the $85 billion per month bond-buying program that keeps the markets from heading downwards.