MORRISTOWN, N.J. and NEW YORK,—Chief Financial Officers in the U.S. are optimistic the sustained economic recovery will provide opportunities for their businesses, according to findings from the most recent survey of Chief Financial Officers conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business.
Despite concerns about the risks and costs associated with healthcare, CFOs maintain a more positive perspective as they enter the second half of 2013 than they did previously, especially towards hiring and employment opportunities.
Respondents to the CFO Quarterly Global Outlook Survey, reports the quarterly optimism index for U.S. CFOs toward their own businesses increased three points to 70.7 from 67.1 last quarter.
Confidence toward the U.S. economy improved, rising to 61.2 from 58.5 in Q1, with 49 per cent indicating they believe the U.S. economy to already be in the midst of a recovery.
In the next 12 months, CFOs anticipate an 11 per cent increase in net earnings and an eight per cent increase in revenue and plan to increase technology spending by seven per cent. 53 per cent are currently directing investments towards dashboard and performance metrics, social media marketing and looking at R&D, cyber security and risk management.
However, CFOs project a 10 per cent increase in costs related to healthcare.
CFOs confidence in the global economy showed improvement, with an increase to 53.9, up three points from the previous quarter (50.8). 73 per cent of U.S. CFOs believe their businesses will be unaffected by a slowdown in China’s and India’s economy and 55 per cent estimate the current government stimulus program in Japan will be unsuccessful.
Other findings from the survey include:
Cash/Capital: U.S. CFOs are most commonly accessing capital from banks, with a third accessing capital from equity and a quarter from debt markets. 16 per cent are considering asset-backed loans and 11 per cent are considering an acquisition in the next 12 months.
Quantitative Easing: Most U.S. CFOs believe that Quantitative Easing (QE) will taper off by the end of 2014, while a quarter believe it would taper off by the end of this year. CFOs are generally split on the impact of QE on their companies—52 per cent do not anticipate an impact, 48 per cent expect QE ease to affect their businesses, financing and equity/debt markets.
Inflation: CFOs expect the rate of inflation will be two per cent on average six months from now and close to three per cent in a year. 61 per cent see the volatility of energy prices increase expectations for inflation.
Interest Rates: U.S. CFOs expect interest rates to remain below one percent over the next six months, and increase slightly one year from now.
Capital Spending: More companies currently spending at a normal rate or making ambitious investments in capital expenditures (54 per cent). Of those making capital expenditures, the 67 per cent are directing investments towards technology.
Sequestration: This year, the majority of businesses (65%) were not impacted as a result of sequestration. Of the 18% that were impacted, revenue was the area most affected (82%). Contracts, customers and delays in orders were also commonly reported as being affected.
Read full survey results and historical data comparisons.