The Vistage quarterly CEO Confidence Index is moving skyward, and at a rapid pace, with the current score making it into triple digits. Even more important, the majority of CEOs think the current recovery has legs. Further, despite learning to operate with less staff, CEOs are also beefing up their hiring plans going forward.
The line of improvement shown in the Vistage index is steep: In Q3 2011, it stood at 83.5. It improved to 98.8 in Q4 2011. And now for Q1 2012 it stands at 105.2.
Rafael Pastor, Chairman of the Board and CEO of Vistage International, said: “While CEOs plan to increase hiring, they have adapted their companies to be productive with fewer employees and do not expect employment to return to pre-recession levels anytime soon. They do, however, see the President’s job, whoever he may be, to deal with these fiscal and policy challenges on which the health and growth of our nation’s enterprises and economy depend.”
Vistage says that the majority think we are in the midst of a “durable recovery.” About 60% said the economy improved in the last year, against only 5% who said it got worse; and a majority expect improvement to continue against only 7% expecting a decline. However, GDP gains are expected to be modest over the next 12 months.
Over half of the CEOs – 57% — are planning to increase staff, continuing a trend from the rock bottom hiring year of 2008. Hiring is expected to be gradual and continuous throughout the year.
45% of those surveyed plan to invest in facilities and equipment, on par with Q1 2011.
Three fourths of the CEOs are expecting revenue gains this year. That is on par with expectations expressed in Q4 2011, but well above the bleakest recession survey cited by Vistage, when only 36% had any hope of revenue gains.
The anticipated revenue gains are anticipated to also result in increased profits, with 60% expecting a better bottom line, up from 55% in Q4 2011. However, the expectation that economic improvement will still continue at a gradual pace has dampened enthusiasm on the profit question somewhat. Vistage says its all-time high on this question came in Q4 2003, when 74% of CEOs were optimistic about profits.
Vistage has been surveying chief executives on this topic since 2003.
RBR-TVBR observation: It is often the case that concurrent executive and consumer confidence reports are at odds with one another. Since CEOs see and understand things that the average consumer does not, we like to think their opinions may be a bit more solid. The combination we seem to be seeing at the moment – a plateau for consumers and a positive surge for executives, looks like good news to us.