The Economy

For CFOs, Happy Days Are Here Again

Finance chiefs foresee an improving economy and even plan to hire, according to the new Duke/CFO Global Business Outlook Survey.
Kate O'SullivanMarch 6, 2012

Finance executives’ level of optimism about the U.S. economy is back to normal at last, after falling off dramatically during the recession, according to the latest Duke University/CFO magazine Global Business Outlook Survey, released today.

On average, CFOs rate their optimism at 59 on a 100-point scale. More than half of the 477 U.S. finance executives surveyed say they are feeling better about the economy’s future than they were last quarter. When it comes to their own companies, their optimism registers at 67 out of 100. In the past, rising CFO optimism has been an early indicator of a strengthening economy, points out John Graham, professor of finance at Duke’s Fuqua School of Business and the director of the survey.

In further good news, finance chiefs say they plan to hire in the coming year. CFOs expect to expand their full-time domestic workforces by 2%, temporary hires by 1%, and outsourced workforces by 3%. The projected increase in full-time staff would bring the unemployment rate below 8% by year-end.

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Those looking to hire are finding the search challenging, though. Among the 68% of survey respondents actively trying to fill vacant job positions over the past year, nearly half have had difficulty doing so. Many of those who have struggled to fill open jobs say they’re planning to recruit more actively; just more than a third say they’re looking at hiring and training junior staffers and are willing to pay more to attract better candidates. Overall, CFOs say their companies will boost wages by 3% on average in the next 12 months.

Eric Winston, CFO at Keen Footwear, the Portland, Oregon-based shoe maker, says the company is hiring in key areas like product development and sales. “It is difficult to find the right person,” Winston says. “There are a lot of B players out there.” His CFO peers agree, rating the talent pool exactly average: a three on a five-point scale.

Spending plans overall reflect finance chiefs’ improved outlook. CFOs say they expect to increase their capital spending by 7% over the next 12 months, down slightly from last quarter. Technology spending will increase by 6% in the coming year, in line with last quarter’s prediction. Respondents estimated they will spend 3% more on both research and development and marketing and advertising, up slightly in both cases from the previous quarter.

Not Out of the Woods
Still, CFOs list assorted worries. Winston cites rising energy prices as a major concern. “The recent supply shock could send us back into a recession,” he says. “People have to get to their jobs, and gas at $4 a gallon cuts into their discretionary income.” He also worries about currency swings as European markets continue to struggle.

Indeed, more than 80% of survey respondents say their businesses would suffer should multiple European banks fail, and 27% say the damage would be significant. CFOs cite consumer demand, price pressure, and government policies as top macroeconomic concerns, while the ability to maintain margins and attract and retain qualified workers are the most-pressing internal, company-specific concerns.

Elsewhere, Asian CFOs too have regained their enthusiasm, rating their optimism about their regional economy at 65 out of 100. European finance chiefs are, not surprisingly, less optimistic than their peers around the world, with the shaky European economy resulting in a rating of 54. Finance executives in Europe say they’ll keep shrinking their workforces, while Asian CFOs say they will boost staff by 4% on average.

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