The U.S. YPO confidence index continued what has been a fairly steady rise since the doldrums of mid-2009.
Dallas, Texas (Vocus/PRWEB) February 10, 2011
The YPO Global Pulse CEO confidence index for the United States rose 3.6 points to the highest level recorded since the survey began in July 2009. At that time, the U.S. economy was mired in recession and the index stood at 49.6. It has risen steadily since then to January’s new high of 63.5. The U.S. index is in line with the global index, which rose 2.8 points in January to 64.7.
The quarterly survey results were announced today by YPO (Young Presidents’ Organization), a global network of 17,000 chief executive officers. The YPO Global Pulse survey is the only CEO economic sentiment survey that spans the globe on a quarterly basis, capturing answers from more than 2,200 CEOs representing companies of all sizes, including Fortune 1000-size companies. In total, the companies run by YPO members employ more than 15 million people and generate US$5.4 trillion in annual revenues.
The latest survey included a question about how soon, if ever, China would overtake the United States and the European Union as the world’s biggest economy. Two-thirds said within 10 years, with Asian CEOs the most skeptical.
Conditions have improved significantly. Comparing current economic conditions to those of six months ago, 61% of the CEOs responding indicated that conditions have improved. That is up sharply from 46% in the previous quarter. Production and services companies saw the greatest improvement. All sizes of firms were generally in agreement about the extent of the improvement.
Six-month outlook is bright. Looking ahead six months, survey participants are even more upbeat. Fully two-thirds (67%) of the CEOs expect economic conditions to improve during the next six months, an increase from 60% in the previous quarter. That enthusiasm is widespread across companies of all sizes and sectors.
Sales confidence continues to rise. The YPO sales confidence index for the U.S. climbed to 68.5 in the January survey. From a low of 49.2 in the first YPO Global Pulse survey in July 2009, the U.S. sales index has risen steadily for the past six quarters. Production and service-oriented businesses remain enthusiastic about sales. In the construction sector, about half (48%) look forward to a faster pace of sales over the coming year, compared with just 34% last quarter. Small companies (less than100 employees) were the most optimistic about sales, with almost three quarters of CEOs (73%) expecting sales to increase by more than 10% in 2011.
Hiring picture brightens. The YPO employment confidence index for the United States rose 1.9 points to a relatively healthy level of 59.0 in the January survey. Interestingly, this index climbed into positive territory (above 50.0) for the first time one year ago. And, in fact, private sector employment registered its first increase in January 2010. Hiring expectations were positive across all sectors, including construction, which prior to this point has lagged production and services in this category. Confidence was highest among small companies, with 43% expecting to increase headcounts by more than 10% this year.
Higher capital spending predicted. The YPO investment confidence Index for the U.S. continued its steady climb, rising 1.5 points to 59.7 in the January survey. Investment has been a driving force behind the economic recovery in the United States over the last six quarters. The further rise in this index suggests that investment will continue upward during 2011. The construction sector still lags the production and services sectors in its investment plans. With regards to company size, firms of all sizes expect to boost capital spending.
“The U.S. YPO confidence index continued what has been a fairly steady rise since the doldrums of mid-2009, hitting a new high in the latest quarterly survey,” said Stephen Slifer, YPO Global Pulse economic advisor and chief economist at NumberNomics. “As has consistently been the case, respondents are more optimistic about their sales than they are about their hiring or capital spending. Even so, the survey is telling us that employment and investment spending are likely to accelerate in 2011.”
“Particularly encouraging are the signs of recovery in the construction sector, which has been a drag on the recovery,” said Dave Maney, member of the YPO Colorado Chapter and chairman and co-founder of Denver-based Headwaters MB, a middle-market investment bank. “Nearly half now expect higher sales over the next 12 months compared with just one-third in the October survey.”
Global confidence rose 2.8.points to 64.7, buoyed by high or rising confidence in every region except Australasia, where the Global Pulse index fell 2.2 points to 62.7. The emerging markets, including Asia, are still the most bullish overall. After leading the rest of the world as the most confident region for five out of the last six quarters, Asia was surpassed by Latin America in the January Global Pulse survey by a slim 1-point margin.
Survey respondents were asked, “How long do you think it will take China's Gross Domestic Product (GDP) to overtake the economies of the United States and the European Union and become the world's biggest economy?” Forty-four percent said within five to 10 years, 29% said more than 10 years, 22% said within five years, and 4% said never. Interestingly, Asian respondents were the most skeptical, with 11% saying never, more than twice as high as any other region.
YPO Global Pulse Confidence Index
The YPO Global Pulse Confidence Index combines CEO answers about expected and most-recent-quarter sales, employee numbers, fixed investment and business conditions. The index is centered on 50. An index reading below 50 indicates a negative outlook – the lower the number, the more negative the outlook. A reading above 50 indicates a positive outlook – the higher the number, the more positive the outlook.
The quarterly electronic survey, conducted in the first two weeks of January 2011, gathered responses from 2,256 chief executive officers across the globe, including 1,144 from the United States. Globally, 26% of participants are from large companies (more than 500 employees), 38% from medium-sized companies (100-500 employees), and 36% from small companies (less than 100 employees). By business sector, 24% of participants are from the production sector, 9% from construction and 67% from the services sector. For more information, go to: http://www.ypoglobalpulse.org.
YPO (Young Presidents’ Organization) is a not-for-profit, global network of young chief executives connected around the shared mission of becoming Better Leaders Through Education and Idea Exchange™. Founded in 1950, YPO today provides 17,000 peers and their families in more than 100 countries with access to unique experiences, world-class resources, alliances with top learning institutions, and specialized Networks that help them enhance their business, community and personal leadership. Please visit us at http://www.ypo.org. Also see us on Facebook and follow us on Twitter.
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