For the first time since 2020, The Conference Board’s survey finds that despite rebounding CEO confidence in business conditions and the economy, more plan to reduce their workforce over the next 12 months than expand it.
In Q3, 34% of CEOs said they plan workforce reductions over the next year, up from 28% in Q2. Another 27% plan to add employees, and 39% expect little change in their workforce.
The Conference Board Measure of CEO Confidence report serves as a barometer of the health of the economy from the perspective of U.S. chief executives. The survey conducted July 14-18 found overall CEO confidence rose to 49 points in Q3, up 15 points from the Q2 reading of 34. (A reading under 50 reflects more negative than positive responses).
“CEO confidence recovered in the third quarter after collapsing in Q2, but fell short of signaling a return to optimism,” said Stephanie Guichard, senior economist at The Conference Board.
“The improvement is a continuation of the trend seen after tariff disputes between the U.S. and China became less intense and potentially reflects ongoing progress on trade negotiations,” she said.
“All three components of the Measure improved from deep pessimism to near neutral. CEOs’ views on current economic conditions made the sharpest recovery. Their six-month expectations for the economy as a whole and in their own industries also improved.
“CEOs’ assessments of conditions in their own industries—a measure not included in calculating the topline Confidence measure—also recovered but remained in pessimistic territory,” Guichard said. “Fear of recession within the next 12-18 months fell dramatically, to 36% in Q3 from 83% in Q2.”
Roger W. Ferguson, Jr., vice chairman of The Business Council and chair emeritus of The Conference Board, said concern about trade and tariff risks receded in Q3 to third place among top business risks, behind geopolitical instability and cyber risks.
“The share of CEOs planning to raise wages by 3% or more over the next year ticked up to 61% from 58% in Q2,” Ferguson said. “As in previous quarters, most CEOs indicated no revisions to their capital spending plans over the next 12 months. However, for a second consecutive quarter, the share of CEOs expecting to cut back investment plans was higher than the share expecting to upgrade them.”
Other findings:
- 34% of CEOs said economic conditions were worse than six months ago, down from 82% in Q2. Another 22% said economic conditions were better, up from 2% in Q2.
- 38% of CEOs said conditions in their own industries were worse than six months ago, down from 69% in Q2. Another 18% said conditions in their industry were better, up from 7%.
- 30% of CEOs expected economic conditions to worsen over the next six months, down from 64% in Q2. Another 30% expected economic conditions to improve, up from 18%.
- 25% of CEOs expected conditions in their own industry to worsen over the next six months, down from 51% in Q2. Another 30% expected conditions in their industry to improve, up from 18%.
