CEO Confidence Rebounds Sharply in the Final Quarter of 2016
January 5, 2017 | PRNewswireEstimated reading time: 1 minute
The Conference Board Measure of CEO Confidence, which had declined slightly in the third quarter of 2016, increased sharply in the fourth quarter. The Measure now reads 65, up from 50 in the third quarter of 2016 (a reading of more than 50 points reflects more positive than negative responses).
"CEO Confidence surged in the final quarter of 2016, reaching its highest level in nearly six years," said Lynn Franco, Director of Economic Indicators at The Conference Board. "CEOs were considerably more optimistic about short-term growth prospects in the U.S. than in the third quarter, and to a lesser degree about prospects in developed and emerging markets. Regarding prices in 2017, chief executives expect to hike prices by less than 1.5% on average."
CEOs' assessment of current economic conditions was considerably more optimistic, with close to 60% saying conditions were better compared to six months ago, up from just 17% last quarter. Business leaders' appraisal of current conditions in their own industries also improved significantly, with 46% stating conditions in their own industries have improved versus only 21% in the third quarter.
CEOs' short-term outlook for the U.S. economy also improved markedly, with approximately 67% expecting better economic conditions over the next six months, up from 25% last quarter. The outlook for their own industries was also more favorable, with 58% of CEOs anticipating an improvement over the next six months, compared to about 23% in the third quarter.
Global Outlook
CEOs' assessment of current conditions improved for most economies, with the United States posting the largest gain. CEOs' assessment of conditions in India was unchanged, but remained positive. Despite improving sentiment in Europe, China, Brazil and Japan, chief executives remain moderately pessimistic.
CEOs are significantly more optimistic about short-term prospects for the United States following the presidential election. Their expectations for Brazil and Europe have turned slightly positive. Expectations for India are still positive, although less so than last quarter. Expectations for China and Japan remain neutral.
Modest Price Increases Projected for 2017
The majority of chief executives expect changes in their firms' selling prices in 2017 — with about two-thirds of CEOs anticipating price increases of less than 4%, and only about 7% expecting increases in excess of 4%. On average, firms plan to hike prices by 1.3%. About 12% plan decreases and 14% foresee no change.
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