Corporate CFO's Have a Bleak Near-Term Outlook
According to the most recent Duke University/CFO Magazine Global Business Outlook Survey, CFOs have a bleak outlook for the rest of 2010. CFOs surveyed foresee "minimal increases in expected hiring, weak consumer demand, and heightened economic uncertainty."
Many also see growth and capital spending faltering within the next six- to 12-months.
A summary of findings from the survey is as follows:
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Many also see growth and capital spending faltering within the next six- to 12-months.
A summary of findings from the survey is as follows:
- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter, and the lowest since Q109, when the CFOs rated the economy at a 40. Pessimists outnumber optimists four-to-one. Optimism is rated 58 by European CFOs and 70 by Asian CFOs.
- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.
- Earnings are expected to rise 12 percent and capital spending almost 7% in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
- U.S. CFOs expect to increase domestic full-time employment by 0.7% in the next year. Nearly one-fourth of all recent hires have been contract and temporary employees.
- CFOs’ economy-wide concerns include federal government policies, weak consumer demand, price pressure and the weak national employment outlook. By a wide margin, the top concern among CFOs about their own businesses is the struggle to maintain profit margins, followed by rising health care costs and low employee morale.
- Exports are expected to increase by 50 percent over the next five years.
- On a year-over-year comparison, 30% of companies say that its harder to borrow money, compared to 25% who take a more positive stance.
- Only 5% of CFOs say financial reform will benefit their firms, and 50% say it will hurt
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