CEOs Turn More Confident In Latest YPO Global Pulse Survey

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The YPO Global Pulse Confidence Index for the United States rose a modest 1.9 points to 61.0 in the latest poll of U.S. CEOs, after two consecutive quarters of decline.

While business confidence did rise in January, presumably in response to the year-end fiscal cliff deal, the increase was marginal, perhaps muted by the ongoing political debate over the federal debt ceiling. - Alan Zafran

The YPO Global Pulse Confidence Index for the United States rose a modest 1.9 points to 61.0 in the latest poll of U.S. CEOs, after two consecutive quarters of decline. The improvement was in line with a sharper global rise in business confidence, particularly in Europe and Asia.

The January survey results were announced today by YPO (Young Presidents’ Organization), a not-for-profit global network of 20,000 chief executive officers. The YPO Global Pulse is the only CEO economic sentiment survey to span the globe on a quarterly basis, capturing answers from more than 2,400 CEOs representing companies of all sizes around the world, including nearly 1,000 in the United States.

Key Findings
Improvement began in the last quarter. When asked to evaluate economic conditions today compared with six months ago, 39% of survey respondents indicated that economic conditions had improved compared with 33% one quarter earlier. Moreover, the percentage that thought conditions had deteriorated fell to 16% compared with 25% in the previous quarter.

Brighter outlook widespread. Looking six months into the future, YPO CEOs were upbeat. More than four in 10 (42%) thought that economic conditions would improve by mid-2013, up from the 36% who thought that would be the case in October. Moreover, only 14% expected conditions to worsen, down significantly from the 22% who held that belief one quarter ago. The positive expectation was widely shared by companies of all sizes in both the production and services sectors.

U.S. CEOs boost sales, hiring and fixed income forecasts. When asked to project 12 months into the future, survey respondents were more sanguine than they were in October with regards to expected revenues, hiring, and capital spending. Of the three, CEOs were the most bullish about sales, as they have been for the past three years. The sales component of the YPO Global Pulse Confidence Index for the United States landed at 67.7 in January, 7.8 points above the fixed investment component of the index and 8.4 points above the employment component.

Commentary
“The past two quarterly surveys suggested that the uncertainty caused in part by the ‘fiscal cliff’ issue were weighing on CEO confidence,” said Alan Zafran, managing director of California-based investment adviser Luminous Capital, a division of First Republic Investment Management, and a member of YPO’s Global One Chapter. “While business confidence did rise in January, presumably in response to the year-end fiscal cliff deal, the increase was marginal, perhaps muted by the ongoing political debate over the federal debt ceiling. In any case, fears that the economy could plunge back into recession have been allayed,” he added.

Stephen Slifer, YPO Global Pulse economic adviser and chief economist at NumberNomics, said, “The latest survey results represent a collective sigh of relief that the worst-case fiscal cliff scenario has been avoided. But business confidence still has not regained all the ground it lost in the second half of 2012. They no doubt see the 2% increase in the payroll tax acting as a damper on growth in 2013.”

Global results
After two consecutive quarters of decline, the YPO Global Pulse Confidence Index rallied to 61.3 in January 2013, up 2.3 points from its October level. Of the nine regions of the world, four landed above the global composite index: Africa (67.6), Asia (64.3), non-EU Europe (62.1) and Latin America (63.5). The Middle East and North Africa region fell for the third consecutive quarter, to 58.4. Confidence remained lowest in the European Union, even after jumping 4 points to 55.4. Non-EU Europe recovered the most ground in the latest survey, surging 6.5 points. The Asia index rose 4.3 points, its largest quarter-over-quarter increase in more than three years.

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.

Survey methodology
The quarterly electronic survey, conducted during the first two weeks of January 2013, gathered answers from 2,458 chief executive officers across the globe, including 977 in the United States. Globally, 28% of participants were from large companies (more than 500 employees), 37% from medium-sized companies (100-500 employees), and 35% from small companies (less than 100 employees). By business sector, 24% of participants were from the production sector, 8% from construction and 68% from the services sector. For more information, visit http://www.ypo.org/globalpulse. Click here to view a video summary of the global results.

About YPO
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 ExchangeTM. Founded in 1950, YPO today provides 20,000 peers and their families in more than 120 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. Altogether, YPO member-run companies employ more than 15 million people around the world and generate US$6 trillion in annual revenues. For more information, visit http://www.ypo.org/globalpulse. Also see us on Facebook and follow us on Twitter.

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Michèle Foster

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