Deloitte’s CFO Signals survey for the second quarter of this year (2Q 2017) reveals chief financial officers representing many of North America’s largest and most influential companies continue to be optimistic about the current and future states of major economic regions as well as their own-company prospects. Even as they voice growing concerns about political and policy uncertainty, geopolitical conflict and talent, their business focus on offense over defense for the next year hit a new survey high. Sixty-three percent of surveyed CFOs say they are biased toward revenue growth, one of the highest levels in the survey’s history, and only 18 percent claim a bias toward cost reduction, for a survey-high net value of plus 45 percent. The bias toward investing cash over returning it to shareholders (62 percent versus 16 percent) hit another three-year high at a net plus 46 percent.
With regard to major regional economies, surveyed CFOs’ assessments of the North American economy remain positive, with 65 percent saying current conditions are good and 58 percent expecting better conditions in a year. Current and future perceptions of Europe both hit four-year highs, with 17 percent of CFOs saying they are good and 30 percent expecting them to be better in a year. Finally, perceptions of China’s economy improved significantly, with 28 percent of CFOs saying current conditions are good and 32 percent expecting better conditions in a year.
“Last quarter’s CFO Signals survey registered the sharpest uptick in sentiment in its seven-year history, and the global economy has continued to show strength since. As a result, CFOs continue to be strongly optimistic, however, our survey also picked up a growing concern from CFOs about political and policy uncertainty, as well as talent shortages, all figuring among their most worrisome risks, said Sandy Cockrell III, national managing partner of the U.S. CFO Program, Deloitte LLP.
All four business outlook metrics, tracked by this survey for 29 quarters, remain strong. Revenue growth expectations rose from 4.3 percent last quarter to 5.6 percent, above the prior two-year survey average. Earnings growth expectations rose to 8.7 percent from last quarter’s 7.3 percent, a two-year high. Capital investment growth expectations fell to 9 percent this quarter from last quarter’s 10.5 percent, but still sit at their second-highest level in five years. Domestic hiring expectations held steady quarter-over-quarter at 2.1 percent. Net optimism declined from last quarter’s survey-high at plus 50 to plus 44 percentage points—the second- highest level in four years—with nearly 55 percent of CFOs expressing rising optimism and 11 percent citing declining optimism.
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