Chief executives' confidence dips

January 13, 2004

'Unsustainable' 3rd quarter growth to blame


Inman News

Chief executives' confidence in the nation's economy, which surged in the third quarter, declined in the fourth quarter of 2003, The Conference Board reports today.

The Conference Board's quarterly measure of CEO confidence, which had improved to 67 in the third quarter, slipped to 66 in the final quarter of 2003. A reading of more than 50 points reflects more positive than negative responses. The survey covers more than 100 CEOs in a wide variety of industries.

"The dip in CEO confidence was expected given the unsustainable pace of growth in the third quarter of 2003," said Conference Board economist Ken Goldstein. "However, CEOs remain quite optimistic about the first half of 2004, and that optimism should translate into a pick-up in business activity."

Chief executives' assessment of current economic conditions gained further ground in the fourth quarter, with the confidence measure rising to 68 from 64. CEOs say that current economic conditions have improved – 88 percent versus 60 percent last quarter. In assessing their own industries, close to 63 percent say business conditions have improved, up from nearly 36 percent last quarter.

But CEOs' expectations for the next six months are more subdued. Chief executives' outlook for the economy slid to 66, down from 73 in the third quarter. Industry expectations were also more tempered, with this measure declining to 63 from 66.

The majority of chief executives expect changes in their firms' selling prices in 2004 – with 5 percent anticipating price increases in excess of 10 percent. On average, firms plan to hike prices by only 1.5 percent. Some 19 percent plan decreases. About 22 percent foresee no change.

Copyright: Inman News Features


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