Chief executives’ confidence in the U.S. economy, which rose last quarter, has now jumped even higher, The Conference Board reported.
The Conference Board’s Measure of Business Confidence, which had improved to 60 in the second quarter of 2003, climbed to 67 in the third quarter (a reading of more than 50 points reflects more positive than negative responses). The quarterly survey covers approximately 100 CEOs in a wide variety of industries.
"The continued rise in CEO confidence is strong evidence of a turnaround in corporate performance," says Lynn Franco, director of The Conference Board’s Consumer Research Center. "This is also indicated by an improvement in capital spending plans."
Chief executives’ assessment of current economic conditions has become considerably more favorable, with the measure rising to 64, up from 55 in the second quarter. The increase was caused by a sharp rise in the percentage of CEOs stating that current economic conditions have improved—60 percent versus 35 percent last quarter. In assessing their own industries, however, the increase was more modest: the measure increased to 57 from 52. Close to 36 percent of survey participants say conditions have improved, up from nearly 33 percent in the previous survey.
In looking ahead, CEO expectations are very optimistic. Business leaders’ outlook for the economy improved to 73 from 66. Their industry expectations were also more upbeat with the measure rising to 66 from 60.
Approximately 12 percent of CEOs report an increase in their companies’ capital spending plans since January of this year, while 31 percent have scaled back plans. This is a change from 2002, when 11 percent of business leaders had increased their capital spending plans while 38 percent had made cuts.
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