CEO Confidence No Longer In Free Fall, Says Survey

[Brad Kenney]

According to the June 5 CEO Index, confidence in the U.S. economy by a crucial stakeholder group -- i.e., the people running it -- is no longer in free fall.

Maybe the economy has finally hit bottom? My 401K certainly hopes so, although new rounds of massive writedowns by the banking sector doesn't exactly make me bullish on a bull market return anytime soon.

And despite the fact that index benchmarks "showed signs of stabilization in May," almost half of CEOs (43 percent) say employment will decrease over the next quarter, "a stark contrast from only 16 percent who say employment will increase."

The Future Confidence Index rose 15.7 percent to 84.4 points, and the Investment Confidence Index rose 2 percent to 107.3 points.

Here's some more info from the survey:

Despite these slight increases, however, CEOs are still uncertain about the current and future investment environment, as over half of respondents (56 percent) say they would describe current conditions as "bad," and 25 percent say they expect the economy to experience a "gradual decline" over the next quarter. "We are avoiding U.S. investment at this time," says Mark
Renkert, CEO of Fairhaven Crowne.

Furthermore, most CEOs (43 percent) say they think "the worst is happening right now" and almost half of CEOs (48 percent), say they are "responding and managing through the downturn."

... a significant number of CEOs (36 percent) who think the "worst is yet to come." In fact, the ratio between CEOs who believe "the worst is yet to come" versus those who say "the worst is behind us" is nearly 2:1.

CEO Index, May 2008

Index May, 2008 Monthly Change

CEO Index 95.8 +0.6
Current Confidence Index 112.9 -1.2
Future Confidence Index 84.3 +0.1
Business Condition Index 84.1 -0.9
Investment Confidence Index 107.3 +2.0
Employment Confidence Index 94.1 -3.6

How would you characterize the slowdown in the US economy?

The worst is yet to come 119 35.8%
The worst is happening right now 144 43.4%
The worst is behind us 62 18.7%
Other 7 2.1%


View the full report at Chief Executive's site:
http://www.chiefexecutive.net/ceoindex.

[Adamgilly]

CEOs were also asked about the prospects they face in hiring foreign labor versus domestic labor.
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Adam