CEOs’ appraisal of current economic conditions was slightly less favorable, with 67 percent saying conditions have improved compared to six months ago, down from 71 percent last quarter. However, in looking at their own industries, business leaders’ assessments improved, with 61 percent claiming conditions are now better, up from 59 percent last quarter.
CEOs remain positive about the short-term outlook, but appear to be growing slightly more cautious. Forty-eight percent of business leaders expect economic conditions to improve in the next six months, down from 52 percent last quarter. However, expectations for their own industries are slightly more optimistic, with 43 percent anticipating an improvement in the months ahead, up from 42 percent last quarter.
Market/Demand Growth Seen as Principal Driver of Profits
On the issue of profit expectations over the next 12 months, 72 percent of chief executives foresee increases. Those engaged in the durable goods industry are the most optimistic, with 88 percent expecting profits to rise. Executives in the non-durable goods industry are second, with 78 percent anticipating an increase in profits. Only 59 percent of executives in the service industry expect profits to increase.
Among chief executive officers who expect profits to rise, 49 percent believe market/demand growth will be the driving force, while 29 percent cite cost reductions as the main source of improvement. Only 13 percent cite price increases as a driver of growth. The remaining 9 percent cite new technology.
