Another Quarter of Soaring Optimism Leaves CEO Confidence at Highest Level since Measure began in 1976.
The Conference Board Measure of CEO Confidence™ improved further in the second quarter of 2021, following a sharp increase in Q1. The measure now stands at 82, up from 73. This marks the highest level of CEO confidence recorded since the measure began in 1976.
CEOs' assessment of current economic conditions rose substantially, after slightly moderating last quarter. In Q2, 94 percent said conditions are better compared to six months ago, up from 67 percent in Q1. CEOs also expressed greater optimism about conditions in their own industries, with 89 percent reporting better conditions compared to six months ago, up from 68 percent in Q1. Historically high expectations in Q1 climbed even further in Q2: 88 percent of CEOs expect economic conditions to improve over the next six months, up from 82 percent.
"This quarter's survey marks a remarkable turnaround from a year ago—when CEO confidence reached a nadir of 34 at the height of COVID-19's first wave," said Dana Peterson, Chief Economist of The Conference Board. "For CEOs, the challenge of navigating a once-in-a-century pandemic is receding, as the focus turns to hiring and investing to compete in an economy poised to see the fastest growth in decades over the months ahead."
In the job market, the pace of hiring is expected to accelerate over the next 12 months, with 54 percent of CEOs expecting to expand their workforce, up from 47 percent in Q1. While the outlook for wages was virtually unchanged in Q2, more CEOs are reporting difficulty finding qualified workers—57 percent in Q2, up from 50 percent in Q1.
"Optimism is surging in C-suites and boardrooms across industries," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. "For CEOs, the challenge is no longer staying afloat, but keeping pace—in particular, with a likely resurgence of the labor shortages experienced before the pandemic."
CEOs' assessment of general economic conditions in Q2:
94% of CEOs reported conditions were better compared to six months ago, up from 67% in Q1.
2% said conditions were worse, down from 10%.
CEOs were optimistic about industry conditions in Q2:
89% of CEOs reported that conditions in their industries were better compared to six months ago, up from 68%.
Only 4% said conditions in their own industries were worse, down from 8%.
Future Conditions. CEOs' expectations about the short-term economic outlook improved further in Q2:
88% percent of CEOs said they expect economic conditions to improve over the next six months, up from 82% in Q1.
Only 1% expect conditions to worsen, down from 7%.
CEOs' expectations regarding short-term prospects in their own industries also improved in Q2:
81% of CEOs expect conditions in their own industry to improve over the next six months, up from 78%.
Only 4% expected conditions to worsen, down from 7%.
Capital Spending, Employment, Recruiting, and Wages. The survey also gauged CEOs' expectations about four key actions their companies plan on taking over the next 12 months.
Capital Spending: 47% of CEOs expect to increase their capital budgets in the year ahead, up from 45% in Q1.
Employment: 54% of CEOs expect to expand their workforce, up from 47% in Q1.
Hiring Qualified People: 57% of CEOs report some problems attracting qualified workers, up from 50% in Q1. Notably, 28% report difficulties that cut across the organization, rather than concentrated in a few key areas—up from 18% in Q1.
Wages: 37% of CEOs expect to increase wages by 3% or more over the next year, virtually unchanged from 36% in Q1.
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
About The Business Council
The Business Council is a forum for the CEOs of the world's largest multinational corporations across all industry sectors. Members gather several times each year to share best practices, network and engage in intellectually provocative, enlightening discussions with peers and thought-leaders in business, government, academia, science, technology and other disciplines. Through the medium of discussion, the Council seeks to foster greater understanding of the major opportunities and challenges facing business, and to create consensus for solutions.
For more details, please visit The Business Council's website: www.thebusinesscouncil.org