For the first time in the past nine months, more executives are confident about the future than not, pushing the Corporate Executive Board "business barometer" past the "50" mark. With the needle pointing at 51, the world's business decision-makers are optimistic about a global recovery but still more cautious than some recent data suggest.
What makes this optimism interesting is that their views are based not on "gut feeling" about the economy but on what heads of sales, supply chain and HR are telling them. In particular, executives expect to invest more in capital expenditure this year than they previously thought and are bullish about consumer confidence; this means they see a boost to both B2B and B2C markets.
However, the underlying data shows executives are still uncertain about what form the recovery will take and their outlook on hiring means they don't see unemployment easing any time soon.
The Supply Chain and Operations Barometer retreated in Q2 from a somewhat positive reading to a cautiously neutral position. While two-thirds of supply chain and operations executives now expect a boost from rising new orders and the introduction of new products, their optimism is tempered by rising core input prices. Further, 51 percent expect higher supply chain disruption risk (compared to 37 percent in Q1).
Growth, costs and consumer confidence all are expected to rise. Seventy percent of executives expect their firms' revenues to increase in the next year, and 53 percent of them expect growth in excess of 5 percent.
Unsurprisingly, 64 percent of executives expect greater cost pressure in the next 12 months as well; however, most of them (63 percent) expect only a 1-percent to 4-percent increase in costs. This is due to a widely anticipated rise in the prices of energy and other commodities, as well as a rise in labor costs. Fewer executives expect an increase in hiring, but 60 percent expect consumer confidence (and potentially spending) to improve over the next twelve months (compared to 51 percent in Q1).
