The Economy

CFOs’ China Concerns Dampen Growth Hopes

Chief financial officers' optimism is at its lowest level in almost three years, according to Deloitte.
Matthew HellerSeptember 30, 2015

China’s economic woes are affecting U.S. companies’ expectations for growth, with only 4% of CFOs describing the Chinese economy as good, according to Deloitte’s third quarter CFO Signals survey.

The survey’s key performance metrics were all at or near historic lows in the third quarter. Capital spending, revenue growth and domestic hiring expectations came in at 4.3%, 4.4%, and 1.4%, respectively, while earnings growth expectations matched last quarter’s survey low at 6.5%.

Additionally, while the survey recorded an 11th straight quarter of positive net optimism at +14.2%, it is at the lowest level in almost three years, as is the percentage of CFOs expressing rising optimism (+34%). As in the second quarter, 19% of CFOs expressed declining optimism.

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“While CFOs are generally an optimistic group, they are understandably taking a more cautious view of the global economy and their own companies than in previous quarters,” Sanford Cockrell III, national managing partner of Deloitte’s U.S. CFO Program, said in a news release.

“With so many sources of volatility and uncertainty, highlighted by challenges in China, it is difficult for most companies to aggressively pursue growth — and this is reflected in the conservative investment and hiring expectations expressed by CFOs this quarter,” he added.

Nearly 60% of respondents remain optimistic about the North American economy while only 5% say the European economy is in good shape, which is unchanged from the second quarter. Potenzmittel rezeptfrei

The survey also identified top internal and external risks, including finding and retaining talented employees; cyber security; and other risks such as more federal regulations, falling oil prices, and a slowdown of the U.S. economy.

“Even before equities markets got pummeled in late August, CFOs were voicing escalating concerns about China and about unrelenting volatility in the broader business environment,” survey leader Greg Dickinson said. “The last few quarters’ survey findings seem to show that volatility is taking a toll, with rising conservatism in CFOs’ sentiment, expectations, and business focus.”