For further information: Lynn Franco (212) 339-0344
The Conference Board
For Release Wednesday, July 7, 1999 at 10 a.m. ET Release #4499A
CEO CONFIDENCE CONTINUES TO INCREASE; UP BY TEN POINTS THIS QUARTER
Profit Expectations Very Optimistic
Chief executives' confidence in the nation's economy increased for the third consecutive quarter, The Conference Board reports today.
The Conference Board's Measure of Business Confidence in the second quarter of 1999 jumped to 56, an increase of 10 points from the previous quarter's reading of 46 (A reading of more than 50 points reflects more positive than negative responses).
"The continued strength of the U.S. economy is no doubt partly responsible for the strong current assessment of economic conditions on the part of chief executives," says Lynn Franco, associate director of The Conference Board's Consumer Research Center.
POSITIVE FEELINGS NOW AND ABOUT THE FUTURE
CEOs' assessment of current economic conditions improved substantially from the first quarter survey. Approximately 41% of the CEOs feel economic conditions have gotten better over the past six months, up from 25%. Those who feel conditions have deteriorated over the past six months declined to 7% from approximately 19% in the first quarter of 1999.
Business leaders' confidence regarding conditions in their own industries was significantly more upbeat. Now, close to 53% of CEOs feel conditions are better than six months ago, up from about 24% last quarter. Slightly more than 16% feel conditions are worse, down from more than 32%. CEOs' short-term outlook has also picked up. Now, 30% of executives anticipate economic conditions improving over the next six months, up from 17% previously. Only 21% hold the opposite view, down from more than 36% last quarter. Business leaders expecting conditions in their own industries to improve rose to 41% from 32% in the prior survey. The proportion expecting conditions to worsen declined to less than 18% from more than 25%.
CEOs ARE HOPEFUL ABOUT PROFIT EXPECTATIONS
Regarding profit expectations during the next 12 months, more than three out of every four executives anticipate increases. However, there are differences by category of business. Executives in the durable goods industries are the most optimistic, with 83% expecting profits to increase. Business leaders in the non-durables industries are a close second, with 81% anticipating a rise in profits. Those CEOs in the service industries are the least optimistic with only 68% expecting a boost in profits. Among chief executive officers expecting profits to increase, 46% cite cost reductions as the main source of improvement; 41% cite new technology as the most likely source. Only 9% foresee an increase in market/demand growth as the main source of improvement, while the remaining 5% percent plan to boost profits via price increases.
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