CEOs are feeling a little more optimism these days, even though most still anticipate an economic downturn ahead, according to survey results released Thursday that show The Conference Board Measure of CEO Confidence has moved 6 percentage points higher to a score of 48 in Q3.
The Measure of CEO Confidence is based on CEOs’ perceptions of current and expected business and industry conditions and is viewed as a barometer of the health of the nation’s economy from the perspective of chief executives. The survey by The Conference Board in collaboration with The Business Council also gauges CEOs’ expectations about future actions their companies plan to take regarding capital spending, employment, recruiting, and wages.
Although the new Q3 score of 48 means there is more optimism than in Q2 when the confidence score was at 42, any score under 50 still means there were more negative responses than positive.
“The gloom that pervaded among CEOs at the start of 2023 has lessened, but most are still treading carefully,” said Roger W. Ferguson, Jr., vice chairman of The Business Council and trustee of The Conference Board.
In Q3, just 28% of CEOs reported general economic conditions to be better than they were six months ago, while 31% of CEOs said they are worse—down sharply from 55% last quarter,” Ferguson said.
“Meanwhile, future expectations improved moderately: only 39% of CEOs in Q3 expected general economic conditions to worsen over the next six months, down from 56% in Q2, while 30% anticipated worse conditions in their own industry, down from 40% in Q2,” he said.
Dana M. Peterson, chief economist of The Conference Board, said amid the economic uncertainty, CEOs are shifting tactics to prepare for a downturn while remaining challenged by an unusual labor market.
“With recession fears persisting, 63% of CEOs now plan to keep capital spending plans unchanged in the year ahead—up from 56% in Q2,” Peterson noted. “That said, just 14% expected to decrease capital spending plans, compared to 22% planning to increase them.”
Attracting qualified workers remains difficult for most companies with 74% of CEOs saying they plan to raise wages by more than 3% over the next year, Peterson said.
“The competition for talent is fierce: 40% of CEOs expect to ramp up hiring in the next 12 months and another 40% are maintaining the size of their workforce—a sign of labor hoarding in an extremely tight labor market,” Peterson said.
About half of CEOs cited cybercrime (55%) and geopolitical instability (51%) as “high risks” to their industry. Other “high risks” were excessive regulation (49%) and artificial intelligence (41%).
More data from the survey, conducted July 10-24, can be found here.
