Surveys agree: Pessimism about economy grows
Posted June 7, 2012
Chapel Hill, N.C. — Two major surveys of corporate financial executives this week show a stark contrast hiring outlook but are in agreement that optimism about economic growth is dropping.
The American Institute of Certified Public Accountants, which maintains an office in Durham, found only 12 percent of chief executive officers, chief financial officers and other financial executives surveyed planned to expand payrolls over the next 12 months.
On Wednesday, a survey of CFOs from Duke University and CFO Magazine found that 60 percent of companies were planning to hire.
Like the Duke-CFO survey, however, the AICPA report found a drop in optimism about economic growth. Its overall CPA Outlook Index declined by two points to 67 on a scale of 0-100 with 50 considered neutral. The index dropped for the first time after two quarters of growth.
“What we're seeing is the same ‘two steps forward, one step back’ cycle we encountered last year,” said Arleen Thomas, the AICPA’s senior vice president for management accounting. “There's no question survey takers have grown more pessimistic about the U.S. economy, and with expectations muted for profit, revenue and employment growth, there appear to be few catalysts to change that view.”
With U.S. unemployment rate at 8.2 percent, there appears little chance of much improvement in the jobs situation, according to the AICPA. The Duke-CFO Magazine survey found the jobless rate could decline to 7 percent over the next year, based on what CFOs said about hiring plans.
However, the AICPA found that only 12 percent of firms were planning to hire, down from 14 percent the previous quarter.
Meanwhile, the number of firms planning layoffs increased to 10 percent from 7 percent.
Open jobs don't match skills of available workers
A problem for those companies wanting to hire is finding qualified workers. Half those wanting to add employees said they were "having trouble" finding candidates with the right skills.
The lack of desire to hire can be linked to optimism – or lack thereof – about the economy. Only 34 percent of those surveyed are optimistic about what's happening in the U.S., down 9 percent from the last quarter. More than half do have a positive outlook for their own firms.
While executives in only two business sectors – health care and construction – were more positive about the future than in the last survey, 61 percent said they do plan to expand this coming year. That is unchanged from the previous survey.
Bigger businesses are a bit less optimistic with 62 percent of companies of $1 billion or more in sales planning to expand, down from 65 percent. That's the first drop in the survey since the first quarter of 20120.
Top financial concerns included:
1. Domestic economy
2. Regulatory requirements and changes
3. Employee and benefit costs
4. Domestic political leadership
The survey was conducted between May 16-31 and included 1,250 executives.
For more about the report, read here.