CEO Confidence Retreats, The Conference Board Reports

Measure Declines 12 Points in Second Quarter

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Jul 08, 2011, 10:00 ET

NEW YORK, July 8, 2011 /PRNewswire/ -- The Conference Board Measure of CEO Confidence™, which had risen in the first quarter of 2011, retreated sharply in the second quarter. The Measure now reads 55, down from 67 last quarter (a reading of more than 50 points reflects more positive than negative responses).

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "CEO confidence cooled considerably in the second quarter, a reflection of a sluggish U.S. economy. Looking ahead, expectations are that this slow pace of economic growth will continue. Regarding the outlook for profits over the next 12 months, the news was a bit more favorable, with about 70 percent of CEOs anticipating profit increases."

CEOs' assessment of current economic conditions was much more pessimistic than last quarter. Only 33 percent say conditions are better compared to six months ago, down from 85 percent last quarter. In assessing their own industries, business leaders were also more negative. Now, just 40 percent say conditions have improved, compared with 61 percent in the first quarter.

CEOs' optimism about the short-term outlook also declined sharply. Currently, only 43 percent foresee an improvement in economic conditions over the next six months, down from 66 percent last quarter. Expectations for their own industries are about as pessimistic, with just 44 percent of CEOs expecting conditions to improve in the months ahead, down from 49 percent last quarter.

Market/Demand Growth Seen as Principal Driver of Profits

On the issue of profit expectations over the next 12 months, 70 percent of chief executives expect increases. Executives in the durable goods industry are the most optimistic, with 74 percent expecting profits to rise. About two-thirds of executives in the non-durable goods industry and service industries anticipate an increase in profits.

Among chief executives who expect profits to rise, 57 percent believe market/demand growth will be the primary driving force, while 20 percent cite cost reductions and an additional 20 percent cite price increases as the main sources of improvement. The rest cite new technology as the key driver.

Survey results were fielded from mid-May to mid-June
Source: CEO Confidence 2nd Quarter 2011
The Conference Board

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