A key indicator that measures chief executives’ confidence in the economy moved up slightly in the first quarter of 2007, although the outlook for new hires remains weak, The Conference Board reported today.
The Chief Executives’ Confidence Measure, which had improved to 50 in the fourth quarter of 2006, rose to 53 in the first quarter of 2007, according to The Conference Board’s latest survey of nearly 100 business leaders in a wide range of industries. A reading of more than 50 points reflects more positive than negative responses.
“The improvement in CEO confidence this quarter is due primarily to a decline in the number of pessimists, not an increase in the number of optimists,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. “The good news, therefore, is that business leaders do not expect conditions to worsen. But by the same token, they do not expect conditions to improve.”
In assessing current economic conditions, 24 percent of CEOs — unchanged from the fourth quarter — claim today’s economic environment is better than it was in the previous survey. However, in assessing their own industries, business leaders were somewhat more positive than last quarter, with approximately 37 percent claiming conditions are better, up from approximately 23 percent last quarter.
CEOs’ optimism about the short-term outlook was mixed, as fewer executives (27 percent) see economic conditions improving in the next six months, compared with 29 percent in the fourth quarter, while just 15 percent expect conditions to deteriorate, compared with 27 percent last quarter. Expectations for their own industries were also more positive, with 35 percent anticipating an improvement, up from 33 percent last quarter.
A smaller percentage of CEOs (approximately 42 percent) anticipate an increase in employment levels in their industry, down from nearly 46 percent in the first quarter of 2006. Even gloomier, however, is that the proportion of CEOs who anticipate a decrease rose during the period from 24 percent to 32 percent.
Health care costs remain the major obstacle to hiring new workers, according to the survey, with wage and salary costs ranking second on the list. Regulation and litigation costs and other fringe benefits were of lesser concern to business leaders when hiring new workers.
