NEW YORK, Dec. 9, 2021 /PRNewswire/ -- The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council retreated in the final quarter of 2021. The measure now stands at 65, down moderately from 67 in Q3 2021—and substantially from Q2's all-time high of 82. (A reading above 50 points reflects more positive than negative responses.) The survey was fielded from November 3rd through November 19th, before recent news of the Omicron COVID-19 variant.
CEOs' assessment of current economic conditions softened further, but overall remained positive. In Q4, 61 percent said conditions are better compared to six months ago, down from 70 percent in Q3. CEOs' view of conditions in their own industries also weakened, with 58 percent reporting better conditions compared to six months ago, down from 64 percent in Q3. Looking ahead, expectations declined moderately in Q4 compared to Q3: 61 percent of CEOs expect economic conditions to improve over the next six months, up from 60 percent. Similarly, 61 percent of CEOs anticipate short-term prospects in their own industries to improve, down from 65 percent.
"CEO confidence slipped further in Q4, as business leaders continued to wrestle with the economic aftermath—and ongoing social impacts and scientific uncertainties—of the pandemic," said Dana Peterson, Chief Economist of The Conference Board. "Hiring and retention remain defining challenges entering the new year, as CEOs' concerns over labor shortages and wage growth rose further from the heights already recorded in Q3."
Indeed, the job market continued to tighten in Q4, as labor shortages grew more pronounced. Even as the pace of hiring is likely to accelerate over the next 12 months—69 percent of CEOs expect to expand their workforce, up from 60 percent in Q3—filling these open positions may be a struggle: 79 percent of CEOs are now reporting difficulty finding qualified workers, up from 74 percent in Q3. As a result, the outlook for wages rose sharply in Q4, with 79 percent of CEOs expecting to increase wages by 3 percent or more over the next year, up from 66 percent.
"Facing snarled supply chains and inflation, severe labor shortages in many areas, and new viral variants, CEOs are significantly less sanguine than they were earlier this year, when the pandemic seemed all but over," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. "Nevertheless, a strong majority remain optimistic about the prospects for growth, both within their own industry and for the economy as a whole. In the year ahead, fortune will continue to favor those companies and leaders able to nimbly navigate these new and resurgent challenges, putting into practice the hard-won lessons in resiliency that were learned over the past two years."
Current Conditions
CEOs' assessment of general economic conditions declined in Q4:
- 61% of CEOs reported economic conditions were better compared to six months ago, down from 70% in Q3.
- Conversely, 19% said conditions were worse, up from 11%.
- CEOs were less optimistic about conditions in their own industries in Q4:
- 58% of CEOs reported that conditions in their industries were better compared to six months ago, down from 64%.
- Equally, 18% said conditions in their own industries were worse, up from 10%.
Future Conditions
Expectations about the short-term economic outlook remained positive in Q4:
- 61% percent of CEOs said they expect economic conditions to improve over the next six months, up slightly from 60% in Q3. Moreover, the percent that said conditions were "much better" rose.
- Only 13% expect conditions to worsen, up from 9%.
- CEOs' expectations regarding short-term prospects in their own industries also moderated in Q4:
- 61% of CEOs expect conditions in their own industry to improve over the next six months, down from 65%. However, the percent that said conditions were "much better" rose.
- Only 8% expected conditions to worsen, up from 6%.
Employment, Recruiting, Wages, and Capital Spending
The survey also gauged CEOs' expectations about four key actions their companies plan on taking over the next 12 months.
- Employment: 69% of CEOs expect to expand their workforce, up from 60% in Q3.
- Hiring Qualified People:79% of CEOs report some problems attracting qualified workers, up from 74% in Q3. Notably, 64% report difficulties that cut across the organization, rather than concentrated in a few key areas—up from 55% in Q3.
- Wages: 79% of CEOs expect to increase wages by 3% or more over the next year, up from 66% in Q3.
- Capital Spending: 57% of CEOs expect to increase their capital budgets in the year ahead, up from 49% in Q3.
Source: CEO Confidence Survey, December 2021 / The Conference Board
The CEO Confidence Survey was fielded from November 3rd through November 19th, before recent news of the Omicron COVID-19 variant.
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
About The Business Council
The Business Council is a forum for the CEOs of the world's largest multinational corporations across all industry sectors. Members gather several times each year to share best practices, network and engage in intellectually provocative, enlightening discussions with peers and thought-leaders in business, government, academia, science, technology and other disciplines. Through the medium of discussion, the Council seeks to foster greater understanding of the major opportunities and challenges facing business, and to create consensus for solutions. The Business Council is a non-partisan, not-for-profit entity holding 501 (c) (6) tax-exempt status. The Business Council does not lobby. Visit The Business Council's website at www.thebusinesscouncil.org
SOURCE The Conference Board
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