Business Confidence Shows Sharp Increase

April 12, 2002
The Conference Board's Measure of Business Confidence a snapshot of CEOs' views of the economy leaped 26 points in the first quarter of 2002. This measure

The Conference Board's Measure of Business Confidence — a snapshot of CEOs' views of the economy — leaped 26 points in the first quarter of 2002. This measure now stands at 66, up from 40 last quarter. (A reading of more than 50 points reflects more positive than negative responses.)

The survey covers more than 120 chief executives from a wide range of industries.

Nearly 50 percent of business executives say current economic conditions are better than they were six months ago. Only 22 percent reported they are worse. Last quarter, less than 2 percent said conditions were better and 94 percent claimed they were worse. In assessing their own industries, 36 percent feel conditions over the past six months have improved.

Chief executives' views of the next six months have also improved. Nearly 80 percent expect economic conditions to improve in the coming months, while only 3 percent expect conditions to worsen. Last quarter, less than 42 percent felt conditions would improve, while almost 32 percent expected conditions to worsen.

“While part of the rebound in confidence can be attributed to the extremely pessimistic outlook prevalent following the events of Sept. 11,” says Lynn Franco, director of the Conference Board's Consumer Research Center, “signs of an economic turnaround have also helped restore business leaders' confidence.”

CEOs Look for Stronger Job Growth

Approximately 28 percent of business leaders anticipate an increase in employment levels in their industry, up from 19 percent last year. Those anticipating declines tumbled from 51 percent to less than 29 percent.

The biggest obstacle business leaders foresee in hiring new workers are high health-care costs. Regulation and litigation costs and wage and salary costs were of less concern. Workers' fringe benefits are of minimal concern in hiring new workers.