Chief executives’ confidence in the nation’s economy, which had slipped to 66 in the final quarter of 2003, surged to 73 in the first quarter of 2004, The Conference Board reported today. This is the highest reading in 20 years, when the measure reached 74 in the final quarter of 1983. A reading of more than 50 points reflects more positive than negative responses.
The Conference Board’s quarterly measure of CEO Confidence covers more than 100 CEOs in a wide variety of industries.
“CEO confidence has surged to its highest level in 20 years,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “Half of all CEOs surveyed anticipate an increase in hiring plans over the course of the year, suggesting labor market growth should gain momentum in the months ahead.”
CEOs’ overall assessment of current conditions improved dramatically in the first quarter of 2004, with the measure of current economic conditions increasing to 78 from 68. More than 90 percent of CEOs claim current economic conditions have improved, up from more than 88 percent last quarter. In assessing their own industries, the increase was also dramatic – the measure increased to 71 from 60.
Close to 78 percent say conditions have improved, up from 63 percent in the prior survey.
In looking ahead to the next six months, CEOs’ expectations were substantially more optimistic than last quarter. Business leaders’ outlook for the economy improved to 72 from 66. Their expectations for their own industries also posted a healthy gain with the measure rising to 70 from 63.
Half of all CEOs anticipate an increase in employment levels in their industry, up significantly from less than 16 percent a year ago. The proportion of CEOs anticipating a decrease fell dramatically to less than 12 percent from about 47 percent in the first quarter of 2003.
Health care costs remain the major obstacle to hiring new workers. Regulation and litigation costs were of less concern, while fringe benefits and wage and salary costs remain of minimal concern to CEOs when hiring new workers.
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