Wall Street Journal/Vistage Small Business CEO Survey: Confidence levels steady
Results from the latest edition of the Wall Street Journal/Vistage Small Business CEO Survey indicate that confidence levels among small business CEOs have stabilized.
In the September 2017 survey, the Wall Street Journal-Vistage Small Business Confidence Index measured 109.3. While this represents a slight decrease from last month’s index (113.6), it is largely consistent with quarterly averages of 110.0 in Q3 2017, 111.2 in Q2 2017 and 112.7 in Q1 2017.
However, since January, CEOs have expressed declining optimism for U.S. economic prospects. “To be sure, some of the decline in prospects for the economy could be due to the hurricanes or the notion that the rapid pace of GDP improvement in the second quarter would not be sustained,” suggested Dr. Curtin of the University of Michigan, who reviewed the survey results.
Other key findings from the survey include the following.
Fewer CEOs expect growth in U.S. economy
Reflecting on the past year, half of small business CEOs said that U.S. economic conditions have improved. About 42 percent said that the economy has remained about the same.
When asked about prospects for the year ahead, however, only 31 percent of CEOs said they thought economic conditions would improve—a significant decrease from the 60 percent reported in the January 2017 survey. Half of CEOs said the economy would stay the same, while 15 percent said it would worsen.
“The January surge in favorable economic prospects may have been due to the presumption that new policies would be soon enacted in the Trump administration,” suggested Curtin. “The subsequent falloff reflects the recognition that those anticipated policies have, at best, been delayed.”
Only 29 percent of CEOs indicated that the Trump administration had improved their business prospects—a sharp decline from the 62 percent reported in January.
Small businesses anticipate revenue and profit growth
The majority of small businesses (77 percent) said that they expected their revenues to increase in the year ahead. Similarly, 61 percent of small firms said that they expected their profits would increase. Few firms expected declining revenues (5 percent) or declining profits (8 percent).
Strong hiring and investment plans continue
Sixty-four percent of small firms said that they planned to hire more employees in the next 12 months. This equals the percentage recorded last month and ties with the highest levels recorded in 2014 and 2015.
“Hiring intentions clearly indicate that small firms will continue to bolster overall employment growth in the national economy,” said Curtin.
About half of small firms (46 percent) said they planned to invest in plant and equipment in the next year. This is consistent with the range of 46-50 percent recorded in 2017.