CEO Confidence Rebounds

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The Conference Board Measure of CEO Confidence, which declined in the third quarter, bounced back in the fourth quarter of 2017. The Measure now reads 63, up from 59 in the third quarter (a reading of more than 50 points reflects more positive than negative responses).

“CEO confidence rebounded in the final quarter of 2017, following back-to-back quarterly declines,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “CEOs’ short-term expectations for growth in both mature and emerging markets also improved, and they expressed the greatest optimism about short-term prospects in the U.S. In 2018, CEOs anticipate hiking prices by 2.1%, up from 1.3% last year.”

CEOs’ assessment of current economic conditions improved considerably. Currently, 71% say conditions are better compared to six months ago, up from 56% in the third quarter. However, CEOs are moderately less optimistic in their appraisal of current conditions in their own industries. Now, 49% say conditions in their own industries have improved, down from 53% last quarter.

Looking ahead, CEOs’ expectations regarding the short-term outlook was significantly better. Now, 47% expect economic conditions to improve over the next six months, compared to just 39% last quarter. CEOs were also more upbeat about short-term prospects in their own industries over the next six months, with 41% anticipating conditions will improve, versus 36% in the third quarter of 2017.

Global Outlook

CEOs’ assessment of current conditions for China, Brazil and the United States rebounded strongly, while their assessment of current conditions for Europe was unchanged, though still optimistic. CEOs’ assessment of current conditions for India and Japan declined slightly, but remains in positive territory.

Looking ahead, CEOs are considerably more optimistic about short-term prospects for China, Brazil, the United States and Japan. Expectations for India increased marginally. The sentiment reading for Europe eased slightly, though CEOs remain upbeat.

Prices Projected to Rise in 2018

The majority of chief executives expect changes in their firms’ selling prices in 2018 — with about six out of ten CEOs anticipating price increases of less than 4%, and about 18% expecting increases in excess of 4%. On average, firms plan to hike prices by 2.1%, up from 1.3% last year, based on a supplementary question asked annually. About 7% plan decreases in selling prices, and 14% foresee no change.

Results are from surveys fielded from mid-November to mid-December 2017.

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