CEO Confidence Holds Steady, The Conference Board Reports

Majority of Chief Executives Expect Profit Increases in the Next Year

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Jul 12, 2010, 10:00 ET

NEW YORK, July 12 /PRNewswire/ -- The Conference Board Measure of CEO Confidence™, which had decreased in the first quarter of 2010, was unchanged in the second quarter. The Measure remains at 62 (a reading of more than 50 points reflects more positive than negative responses).

"CEOs' confidence held steady in the second quarter and expectations signal no change in the pace of economic growth in the coming months," says Lynn Franco, Director of The Conference Board Consumer Research Center. "The outlook for corporate profits remains optimistic, with almost half saying market/demand growth will be the principal driving force."

CEOs' appraisal of current economic conditions was slightly less favorable, with 67 percent saying conditions have improved compared to six months ago, down from 71 percent last quarter. However, in looking at their own industries, business leaders' assessments improved, with 61 percent claiming conditions are now better, up from 59 percent last quarter.

CEOs remain positive about the short-term outlook, but appear to be growing slightly more cautious. Forty-eight percent of business leaders expect economic conditions to improve in the next six months, down from 52 percent last quarter. However, expectations for their own industries are slightly more optimistic, with 43 percent anticipating an improvement in the months ahead, up from 42 percent last quarter.

Market/Demand Growth Seen as Principal Driver of Profits

On the issue of profit expectations over the next 12 months, 72 percent of chief executives foresee increases. Those engaged in the durable goods industry are the most optimistic, with 88 percent expecting profits to rise. Executives in the non-durable goods industry are second, with 78 percent anticipating an increase in profits. Only 59 percent of executives in the service industry expect profits to increase.

Among chief executive officers who expect profits to rise, 49 percent believe market/demand growth will be the driving force, while 29 percent cite cost reductions as the main source of improvement. Only 13 percent cite price increases as a driver of growth. The remaining 9 percent cite new technology.

Survey results were fielded from mid-May to mid-June.

Source: CEO Confidence 2nd Quarter 2010

The Conference Board

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SOURCE The Conference Board