ARLINGTON, Va., Feb. 23, 2011 /PRNewswire/ -- The Corporate Executive Board (NYSE: EXBD) (CEB) today released results from its quarterly Business Barometer survey, which pointed to several signs of economic improvement in the fundamentals of U.S. businesses. Driven by anticipated increases in consumer confidence, hiring and capital spending, the collective optimism of the more than 400 senior executives who participated in the survey boosted its sentiment index by 1.5 – to 50.6 in Q1 2011 from 48.9 in Q4 2010 – marking the second consecutive quarter of executives' improved economic outlook.
Notably, 82 percent of senior executives expect their firms' revenues to increase, up from 76 percent in Q4 2010, with 50 percent expecting meaningful growth of five percent or more. Additionally, 69 percent of senior executives expect their industries' revenues to grow in the next 12 months (compared to 62 percent in Q4 2010).
"The findings from our latest Business Barometer show that companies are turning a corner in their hiring and investment plans amidst renewed confidence in the health of consumers and an improved outlook for industrialized economies such as the U.S. and Europe," said Michael Griffin, executive director, Global Research for the Finance, Strategy and Legal Practice at CEB. "For the first time since the introduction of this survey, we saw a dramatic increase in the number of executives planning to increase capital expenditures. Moreover, for the first time a majority of senior executives expect their firms to increase overall headcount."
Indicators of Growth
One of the most significant improvements in the Q1 Business Barometer was senior executives' sentiment regarding consumer confidence, with 56 percent of senior executives expecting consumer confidence to improve (compared to 39 percent in Q4 2010 and 38 percent in Q3 2010). This quarter's survey also saw a significant improvement in sentiment among executives about their companies' hiring practices, with 58 percent of senior executives expecting overall staff headcount to grow in the next twelve months (compared to 50 percent in Q4 2010).
Findings from CEB's Business Barometer showed that 70 percent of senior executives expect CAPEX to increase (up from 52 percent in Q4 2010), the highest number since the index began in the last quarter of 2009.
Additional notable findings from CEB's Q1 2011 Business Barometer include:
- Growth prospects in the U.S. and E.U. improved dramatically, with 50 percent of executives seeing stronger economic growth in these industrialized economies (compared to 32 percent in Q4 2010 and Q3 2010).
- The percentage of executives expecting an increase in R&D spending increased to 56 percent, compared to 43 percent in Q4 2010.
- In the next twelve months, 57 percent of executives expect more M&A deals, up from 53 percent in Q4 2010.
- Sixty-six percent of surveyed executives expect to introduce a higher number of new products (compared to 53 percent in Q4 2010) and 94 percent expect to maintain or somewhat increase existing capacity levels (compared to 45 percent in Q4 2010).
Areas of Vigilance
Despite the improved growth outlook, the Q1 Business Barometer indicated that companies continue to face a challenging cost environment. Eighty-four percent of senior executives surveyed expect higher costs of core inputs in the next 12 months (compared to 74 percent in Q4 2010), the highest reading since the start of the index.
- Specifically, the survey found that: ninety-eight percent of senior executives surveyed expect the cost of energy and non-energy related commodities to either remain at current levels or grow even higher.
- Forty-nine percent of executives surveyed expect to see easier access to credit while 41 percent expect no change (compared to 45 percent and 39 percent respectively in Q4 2010).
- In the next twelve months, 48 percent of executives surveyed expect to operate in a higher interest rate environment (compared to 42 percent in Q4 2010).
- Seventy-eight percent of senior executives expect higher labor costs (compared to 77 percent in Q4 2010).
CEB's Business Barometer is a forward-looking diffusion index of expected business conditions, condensed from a survey of more than 430 senior executives in North America and Europe across 33 industries. The Business Barometer provides a unique measure of business sentiment among a representative sample of CEB's executive member network. The index measures the assumptions of senior executives across six functional disciplines, including HR, corporate finance, operations, sales and marketing, real estate and IT, on the impact 12 key business and economic indicators will have on their business in the year ahead.
About the Corporate Executive Board
The Corporate Executive Board drives faster, more effective decision making among the world's leading executives and business professionals. As the premier, network-based knowledge resource, The Corporate Executive Board provides customers with the authoritative and timely guidance needed to excel in their roles, take decisive action and improve company performance. Powered by an executive network that spans over 50 countries and represents approximately 85 percent of the world's Fortune 500 companies, The Corporate Executive Board offers unique research insights along with an integrated suite of exclusive tools and resources that enable the world's most successful organizations to deliver superior business outcomes. For more information, visit www.exbd.com.
SOURCE Corporate Executive Board