The Chief Executives’ Confidence Measure, which had improved to 56 in the final quarter of 2005, edged up to 57 in the first quarter of 2006, The Conference Board reported in its latest survey of CEOs.
The survey, which includes about 100 business leaders from global companies in various industries in the US, assesses CEO confidence levels about a range of forecasts for the economy. A reading of more than 50 points reflects more positive than negative responses.
“CEOs are less confident about the future state of the economy than they were at the close of 2005,” says Lynn Franco, Director of The Conference Board Consumer Research Center. “As a result, many anticipate hiring plans to cool and employment levels to decline. This is yet another sign the second half of 2006 is not likely to be as strong as the first half.”
The key reason for the increase in the overall measure is the CEOs’ assessment of current business conditions. Some 49% of CEOs say current economic conditions are better, up from 44% in the fourth quarter of 2005.
The mood for the second half of 2006, however, is for cautious optimism. Only 35% of business leaders expect economic conditions to improve in the coming months, down from 41% last quarter. Twenty-four percent of CEOs also anticipate a decline in jobs over the next six months, up from about 11% a year ago. Health care costs remain the major obstacle to hiring new workers. Regulation and litigation costs were second on the list.
Source: CEO Confidence
The Conference Board, 1st Quarter 2006
Review by Emilie Filou