NEW YORK, Aug. 13, 2020 /PRNewswire/ -- The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council rose slightly in the third quarter. The measure saw a one-point uptick, moving from 44 in the second quarter to 45 in the third quarter. (A reading below 50 points reflects more negative than positive responses.)
The latest Q3 results also reveal that, over the next 12 months, 38 percent of surveyed CEOs expect to reduce their workforce. Moreover, 37 percent say they will trim their capital spending budgets by 10 percent or more. And with uncertain economic conditions likely to persist, more than a third do not foresee increasing employees' average wages over the next 12 months. Nearly 50 percent say they will increase wages by less than three percent.
"Without substantial containment of COVID-19, widespread uncertainty will continue being the dominant cloud hanging over America's CEO community," said Bart van Ark, Chief Economist of The Conference Board. "With more than one third of CEOs planning to make workforce and sizeable capital spending reductions over the next year, the effects on the economy could extend beyond the next 12 months."
The latest CEO Confidence results reflect a new collaboration with The Business Council, in which The Conference Board surveyed a majority of the Council's CEOs – all of whom lead top global companies. Also, the survey now gauges CEOs' expectations about future actions their companies plan on taking in four key areas: capital spending, employment, recruiting, and wages.
"By collaborating with The Conference Board on their CEO Confidence survey, the world's top CEOs who are members of The Business Council are providing insights on how they are feeling about the economy and the business environment and steps they plan on taking in light of their sentiment," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. "The Conference Board's non-partisan, decades-long track record in conducting renowned surveys makes them an ideal partner for The Business Council, whose mission it is to foster greater understanding of the major opportunities and challenges facing business today."
On the whole, CEOs remain pessimistic about current economic conditions, though to a lesser extent than in the second quarter. Nearly 90 percent say conditions are worse compared to six months ago, down from 100 percent last quarter. Conversely, just 8 percent say general economic conditions are better.
CEOs also continue to feel pessimistic about conditions in their own industries, albeit less so. Currently, about 76 percent say conditions are worse compared to six months ago, down from 82 percent last quarter. About 17 percent of CEOs say conditions are better in their own industries, up from 10 percent last quarter.
While sentiment about present-day conditions modestly improved, expectations about the short-term outlook have retreated. Now, 62 percent expect economic conditions will improve over the next six months, down from 71 percent last quarter. Moreover, nearly 17 percent expect economic conditions will worsen, up slightly from 16 percent in Q2.
CEOs' expectations regarding short-term prospects in their own industries were somewhat more positive than their expectations for the overall economy. Now, 60 percent of CEOs anticipate an improvement in conditions, down from 69 percent last quarter. Those expecting conditions will worsen in the short term, however, decreased to 17 percent from 22 percent in the previous quarter.
Capital Spending, Employment, Recruiting, and Wages The survey also gauged CEOs' expectations about four key actions their companies plan on taking over the next 12 months.
Capital Spending: 37 percent say they will trim their budgets by 10 percent or more over the next 12 months. An additional 18 percent say they anticipate reducing their capital spending plans by less than 10 percent.
Employment: Looking ahead over the next 12 months, 38 percent of CEOs expect to reduce their workforce.
Hiring Qualified People: Nearly two-thirds anticipate little, if any, problems in attracting qualified personnel.
Wages: Nearly 50 percent say they will increase wages by less than three percent.
Source: CEO Confidence Survey Third Quarter 2020 / The Conference Board The CEO Confidence survey was fielded from July 15th through July 31st.
About The Conference Board The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
About The Business Council The Business Council is a forum for the CEOs of the world's largest multinational corporations across all industry sectors. Members gather several times each year to share best practices, network and engage in intellectually provocative, enlightening discussions with peers and thought-leaders in business, government, academia, science, technology and other disciplines. Through the medium of discussion, the Council seeks to foster greater understanding of the major opportunities and challenges facing business, and to create consensus for solutions. Visit The Business Council's website at www.thebusinesscouncil.org