While concerns over the economy remain, US business executives are growing more optimistic about revenue and profit expectations, and other key indicators for the coming year. The insights were part of the first-quarter "AICPA & CIMA Economic Outlook Survey," which polled CEOs, CFOs, controllers, and other certified public accountants in US companies holding executive and senior management accounting roles.
The survey says that only 23% of business executives expressed optimism about the US economy's prospects over the next 12 months, That represents progress from last quarter, however, when only 12% felt that way—the measure's lowest level since early 2009. Inflation, rising interest rates and geopolitical concerns all continue to dampen the US outlook. Ninety percent said they were concerned about recessionary impacts, with 15% significantly so.
Still, many indicators are pointing up this quarter:
- Business executives are expecting slight profit growth (0.6%) over the next 12 months, a switch from either negative or zero growth expectations over the past two quarters. Likewise, 12-month revenue growth projections are back on the rise, from anticipated 2.1% rate last quarter to 2.6%
- Business executives who expressed optimism about their own organizations' prospects over the next 12 months increased from 35% to 47%, quarter over quarter
- In addition, 52% said they expect their companies to expand at least a bit over the next 12 months, up from 47% last quarter. Businesses with over a billion dollars in revenue led this category by a wide margin (68% expect expansion).
The US hiring picture remains strong, although there are some signs of softening. Some 45% said they have the right number of employees, up from 39% last quarter. Nine percent of business executives said they had too many employees, an increase of a single percentage point from last quarter.
The survey also said 32% were taking steps to bring down staffing costs. Some 17% said they have instituted hiring freezes and ceased recruitment of open jobs. Other strategies, employed to a lesser extent, include layoffs, reduced shifts or hours of operation and increased outsourcing.
Tom Hood, AICPA & CIMA's Executive VP for Business Engagement and Growth, says that while hiring demands may be cooling a bit, it is not seeing widespread layoffs—most companies are looking to interim strategies to protect their workforce options.
"In fact, a third of business executives say they're looking to hire immediately, while 'availability of skilled personnel' continues to be a top concern from the survey," Hood says. "This illustrates the unique pressures companies have been under the past year, with so much uncertainty clouding financial modeling."
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the US Department of Labor's November employment report, scheduled for release tomorrow, looks back on the previous month's hiring trends.
Other findings include:
- US business executives' 12-month outlook on the global economy also improved, with those expressing pessimism dropping from 72% last quarter to 48% now.
- Inflation was the top concern of business executives for the sixth straight quarter. "Availability of Skilled Personnel" and "Employee and Benefit Costs" flipped places and are now the No. 2 and No. 3 challenges, respectively.
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