CFO confidence

Findings from the first quarter 2010 CFO Outlook Survey conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business show that CFOs are more optimistic, and they see several bright spots for the future.

“Yet, CFOs still remain cautious in their outlook for the overall health of the economy, and they continue to examine and reevaluate staffing, layoffs and compensation. Issues surrounding healthcare remain foremost for CFOs, and the new reform act is anticipated to create added costs for companies that may result in difficult sacrifices for employees,” noted a statement from FEI.

The CFO Optimism Index for the U.S. economy continued rising for the third consecutive quarter, and increased to 58.14 in Q1 2010 — up almost 33% from an all-time low of 38.96 one year ago. ALso, CFOs’ optimism toward their own companies rose another two points from Q4, reaching 69.49. This represents an 18% increase from what it was one year ago (58.93). Significantly, CFOs are predicting double-digit percentage increases over the next 12 months in net earnings (26%), revenue (13%), capital spending (13%) and technology spending (10%).

OTHER SURVEY FINDINGS
• Close to half of the CFOs do not foresee the recovery truly underway until the first half of next year, or later.

• 38% of CFOs stated their concern about inflation has increased since last quarter.

• CFOs expect minimal change with regards to employment numbers (non-farm payroll) in the next year, anticipating that rates will remain relatively high at 9% (U.S.).

• 69% of CFOs report they are not planning to conduct layoffs (8% more than last quarter), but 14% say they will still need to conduct layoffs this year.

• In the fourth quarter of 2009, 27% of respondents said it was too early to determine whether their companies would conduct layoffs, but this most recent survey saw the percentage of CFOs in that category drop to 14%.

• While CFOs plan to increase hiring over the next 12 months by an average of 7% (twice as much as last quarter), responses indicate the situation is not entirely buoyant.

• Nearly a quarter (23%) are still planning to delay employment start dates for new hires by a few months, and 11% will delay start dates by more than six months, but only 3% will need to rescind job offers completely.

• An overwhelming majority of CFOs feel that the healthcare reform act will be negative both for Americans (73%) and for their own companies (75%). The majority of CFOs (59%) do not believe that all Americans should be required to have health insurance.