CEO Confidence Improved in Q2 2020
Jul 13, 2020 03:57PM
By David Dykes
The Conference Board's measure of CEO confidence, which declined to 34 in the first quarter of 2020, increased to a reading of 44 in the second quarter, the member-driven think tank said.
(A reading of more than 50 points reflects more positive than negative responses.)
“Amid historic unemployment, business growth challenges, a weak economic environment, and a pandemic that persists, it comes as no surprise that CEOs feel grim about the current lay of the land,” said Lynn Franco, senior director of economic indicators at The Conference Board. “An encouraging seven-in-ten CEOs expect that both the economy and their own industry will fare better over the coming months. However, there are no indications yet that this renewed short-term optimism will translate into a pickup in investment.”
CEOs remain "very pessimistic" about current economic conditions, Conference Board officials said.
All respondents said conditions are worse compared to six months ago, about the same percentage as in the second Q1 survey, the officials said.
CEOs also continue to feel grim about current conditions in their own industries. Currently, only 10 percent say conditions are better compared to six months ago, up from 5 percent last quarter, according to the Conference Board.
Additionally, about 82 percent of CEOs say conditions are worse in their own industries, down from about 92 percent last quarter, it said.
Despite feeling bleak, CEOs are generally optimistic about the economic outlook in the next six months, the think tank said.
Now, 71 percent expect economic conditions will improve over the next six months, compared with 50 percent last quarter.
Moreover, only about 16 percent expect economic conditions will worsen, down from 44 percent during Q1.
CEOs’ expectations regarding short-term prospects in their own industries over the next six months mirrored their expectations for the overall economy, Conference Board officials said.
About 70 percent of surveyed CEOs anticipate an improvement in conditions, up from about 49 percent last quarter. Those expecting conditions will worsen in the short term decreased to 22 percent from 46 percent in Q1 2020.
CEOs' assessment of current global conditions in Q2 remains about as pessimistic as in Q1, as the economy is still experiencing the economic consequences stemming from Covid-19, Conference Board officials said.
There was a slight uptick in CEOs’ assessment of conditions in most markets, except Brazil, with the largest improvements in China and Japan. However, on balance, CEO sentiment remained "very negative," the officials said.
Looking ahead, CEOs expressed greater optimism about global growth prospects. They felt most upbeat about growth prospects for China, the U.S., Europe and Japan, and to a much lesser degree India and Brazil, the think tank said.
The CEO confidence survey was conducted from mid-May to mid-June
The Conference Board, founded in 1916, is a nonpartisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.