CEOs report higher expectations for sales and hiring over the next six months, but lower expectations for capital investment, according to the Business Roundtable fourth quarter 2016 CEO Economic Outlook Survey. For the fifth straight year, CEOs cited regulation as the top cost pressure facing their companies.
In their first GDP estimate for 2017, CEOs projected 2 percent growth next year. While the outlook for hiring is positive, the overall results suggest continued economic growth, albeit at a slow pace.
The Business Roundtable CEO Economic Outlook Index—a composite of CEO projections for sales and plans for capital spending and hiring over the next six months—rose by 4.6 points, from 69.6 in the third quarter to 74.2 in the fourth quarter. The Index remains below its historical average of 79.6.
CEO expectations for sales over the next six months increased by 4.5 points, and expectations for hiring increased by a more robust 14.8 points over last quarter. However, CEO plans for capital expenditures fell by 5.4 points relative to last quarter.
“America’s business leaders are encouraged by President-elect Trump’s pledge to boost economic growth,” said Doug Oberhelman, chairman and CEO of Caterpillar Inc. and chairman of Business Roundtable, in a news release. “We will work with the incoming Administration and Congress to enact pro-growth policies such as modernizing the U.S. tax system, adopting a smarter approach to regulation, investing in infrastructure and focusing on the education and training people need to thrive in the 21st century economy.”
In response to a question posed annually in the fourth quarter, CEOs once again reported that regulation was the top cost pressure facing their businesses, followed by labor and health care costs.
“It’s telling that for the fifth year in a row CEOs name regulation as their greatest cost pressure,” said Oberhelman. “We are encouraged by the promise of a renewed focus to usher in a smarter regulatory environment that promotes job creation and economic growth and also protects safety, health and the environment.”
The survey’s key findings from this quarter and the third quarter of 2016 include:
|CEO Survey Results & Sub-Indices||2016 Q3||2016 Q4||Quarter-
|How do you expect your company’s sales to change in the next six months?||59%||29%||11%||98.3||67%||19%||14%||102.8||+4.5|
|How do you expect your company’s U.S. capital spending to change in the next six months?||38%||43%||19%||69.6||35%||43%||21%||64.2||-5.4|
|How do you expect your company’s U.S. employment to change in the next six months?||27%||37%||36%||40.8||35%||35%||30%||55.6||+14.8|
Fourth Quarter 2016 Business Roundtable CEO Economic Outlook Index
The Economic Outlook Index increased from 69.6 in the third quarter of 2016 to 74.2 in the fourth quarter of 2016. The long-term average of the Index is 79.6.
The fourth quarter 2016 survey was conducted between October 26 and November 16, 2016. Responses were received from 142 member CEOs. The percentages in some categories may not equal 100 due to rounding.
Source: Business Wire; edited by Richard Carufel