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CEO confidence falls sharply in Q3, ranges not seen since Covid-19 onset

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August 17, 2022

The Convention Board Measure of CEO Confidence fell sharply within the third quarter to lows not seen for the reason that onset of the Covid-19 pandemic however per prior contractionary durations.

The measure declined for the fifth consecutive quarter and is now at 34, down from 42 within the earlier quarter.

A studying under 50 factors displays extra unfavourable than constructive responses.

“CEO confidence plunged additional in Q3 amid continued excessive inflation, quickly tightening financial coverage, and ongoing geopolitical uncertainty,” stated Dana Peterson, chief economist of The Convention Board. “But, alongside this deepening concern over the path of the financial system, enterprise leaders proceed to report situations and intentions at their very own companies that paint a extra nuanced image.”

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The third-quarter survey for the CEO confidence measure discovered that solely 6% of CEOs reported financial situations are higher in comparison with six months in the past, down from 14% within the second quarter; in the meantime, 77% stated situations have been worse, up from 61%. Wanting forward, solely 7% of CEOs stated they anticipated financial situations to enhance over the following six months, down from 19% within the earlier quarter, whereas 73% anticipated situations to worsen, up from 60%.

CEOs are additionally getting ready for weakening financial situations forward.

The survey additionally discovered that fifty% of CEOs count on to broaden their workforce, down from 63% within the second quarter.

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CEOs continued to report problem discovering certified employees; 73% report some issues attracting certified employees, down from 80% within the second quarter. Notably, 44% report difficulties that reduce throughout the group, moderately than concentrated in a couple of key areas — an enchancment from the prior quarter’s 61%.

In consequence, the outlook for wages rose sharply, with 89% of CEOs within the third-quarter survey anticipating to extend wages by 3% or extra within the subsequent 12 months, down from 91% within the earlier survey.

When requested to explain the financial situations they’re getting ready to face over the following 12 to 18 months, 81% of CEOs reported getting ready for a short and shallow recession with restricted international spillover.

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Conversely, solely 7% anticipate the US received’t fall into recession.

“CEOs at the moment are getting ready for the near-inevitability of a US recession by year-end or in 2023,” stated Roger Ferguson, Jr., vice chairman of The Enterprise Council and Trustee of The Convention Board.

“Nevertheless, the overwhelming majority count on the downturn to be transient and shallow — in comparison with simply 12% anticipating a deep recession, with materials international spillover. Inflation stays the highest problem for CEOs, with 60% reporting that their enter prices have elevated or held regular over the previous three months, with little expectation of easing in 2022.”

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