CEO Confidence Down, Stress Up
International Business Activities Increase
SAN DIEGO (June 6, 2008) — The Q2 2008 Vistage CEO Confidence Index sank to an all-time low this quarter, continuing a downward trend that began more than a year ago. The Index dropped to 69.6, down 2.4 points from Q1 2008. More than 40 percent of the CEOs surveyed believe the U.S. economy will continue to worsen during the next 12 months, and chief executives of small- and mid-sized businesses say because of the economy they are experiencing higher stress levels and slowing down hiring and investment plans.
Firms are mitigating the effects of the worsening U.S. economy by doing more business overseas and eyeing international opportunities. The survey found that CEOs anticipate future growth within their own businesses, but their optimism is too minimal to suggest an end to the overall economic decline.
“Eighty-two percent of all CEOs reported the economy is weakening, while just three percent reported gains during the past year,” says Richard Curtin, Ph.D, a Vistage consultant and director of consumer surveys at the University of Michigan, Ann Arbor. “The data suggests that the degree of uncertainty about the economy sparked an unusual amount of caution while at the same time there are signs that there may be an economic turnaround in CEOs’ businesses in the quarters ahead.”
A quarterly measure of economic, market, and industry trends, the national Vistage CEO Confidence Index has dropped more than 20 points from the level of 90.5 recorded in 2007 and more than 30 points since the survey began in Q2 2003.
“More and more companies are pursuing international opportunities, taking advantage of a weak dollar and the ubiquitous Internet,” says Rafael Pastor, Vistage chairman of the board and chief executive officer. “Nonetheless, CEOs are telling us they are more stressed and as an executive performance organization, we are helping them through these troubling economic times.”
CEOs Stressed
Of almost 2,400 CEOs surveyed, 50 percent say they are more stressed this year than last. Only three percent of CEOs say they are experiencing less stress, while 44 percent expressed feeling the same stress level as last year. Economic uncertainty was their top-listed business issue for the second consecutive quarter, with financial and staffing issues close behind.
International Business Endeavors on the Rise
The domestic economic situation is compelling more companies to consider international opportunities, as well. 42 percent of CEOs say they’re now doing business internationally, up five percent from last quarter, with another 3 percent of CEOs planning to expand internationally in the next 12 months.
Weaker Revenue and Profits
Revenue growth is anticipated by 58 percent of all firms, down from 72 percent a year ago. Lagging revenues and rising energy prices are squeezing profits. Among all firms 45 percent expect improved profits, well below the 59 percent recorded a year ago. This profit squeeze is anticipated despite the fact that the majority of firms expect to raise the prices they charge for their products or services.
Slowdown in Hiring and Reducing Staff
Forty-three percent of all firms plan to add to their payrolls during the year ahead, the smallest proportion recorded in the past five years and down from 57 percent one year ago. One-in-six firms expect to reduce their staffs, making it the highest level of cutbacks recorded since the survey began in 2003. The slowdown in hiring is an indication that slower growth and economic uncertainty are taking their toll.
Investment Plans Wither as Credit Tightens, Demand Down
Increases in investment spending for new plant and equipment are planned by 33 percent of all firms, down from 46 percent one year ago. Despite declines in market interest rates, firms are finding it more difficult to obtain financing. They also anticipate diminished demand for their products, and expect a slower investment payback.
At an increasing rate, member CEOs turn to Vistage International for coaching and best practices to shore up their businesses during tough economic times. Today, the economy is a huge issue throughout Vistage groups nationwide. Every month CEOs gather to discuss growth strategies, while mitigating the risk of a recession. With advice from other CEOs, and from Vistage business coaches known as Chairs who have experienced these same issues, members work together to prepare, minimize risk, and hold each other accountable.
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about the Vistage Confidence Index
U.S. small and mid-sized businesses represent the most vital component of the nation's economy. This sector creates 75 percent of all new jobs and generates 50 percent of all national revenue. The opinions of these business leaders provide a clear snapshot of current economic, market and industry trends and demonstrate their plans for growth over the next 12 months. These insights provide a leading indicator for employment, capital expenditure, sales, revenue and profit trends.
The Q2 2008 Vistage CEO Confidence Index is a compilation of responses from 2,391 CEOs of small- to mid-sized companies, surveyed May 13-27, 2008, with a margin of error of 1.7 percentage points. The Vistage CEO Confidence Index is the largest and only comprehensive report of their opinions and projections.
about Vistage International
Vistage International and its affiliates have more than 14,500 members in 16 countries. Vistage is dedicated to increasing the effectiveness and enhancing the lives of chief executives. Headquartered in the United States, Vistage has operations in the United Kingdom, Ireland, China, Mexico, Argentina, Brazil, Chile, Malaysia, Singapore and the Netherlands. Vistage affiliates, known as TEC, are located in Australia, Canada, Germany, New Zealand and South Africa.
media contacts
Brigitte Lyons Arment Dietrich, Inc.
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Tony Vignieri Vistage International
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tony.vignieri@vistage.com