While CEOs say economic conditions are better than a year ago, their confidence levels have declined from the all-time high reached in the second quarter.
In The Conference Board’s Measure of CEO Confidence, the new reading for the third quarter stands at 67, down from 82 in the prior quarter. The Measure’s survey was conducted in collaboration with The Business Council. While The Conference Board said the reading is still in positive territory, confidence levels reflecting CEO assessment over the short term—about six months out—are on the decline. A reading above 50 for the Measure indicates that there are more positive responses than negative ones.
“CEO confidence is down from the all-time peak reached in Q2, when Covid-19 appeared on the verge of defeat,” The Conference Board’s chief economist Dana Peterson said. “A summer surge of the highly infectious Delta variant—coupled with slumping vaccination rates—has brought pandemic uncertainty back to the fore in Q3. Nevertheless, optimism remains well above pre-pandemic levels, boding well for employment and investment growth in the months ahead.”
In the latest results for the third quarter, 70 percent said conditions are better compared to six months ago, but that’s down from 94 percent in the second quarter. Of those surveyed, 11 percent said conditions were worse, up from 2 percent in the prior quarter. In addition, CEOs’ view of conditions in their own industries fell, with just 64 percent reporting better condition versus six months ago. That’s down from 89 percent in the second quarter. Ten percent said conditions in their own industries were worse, up from 4 percent in the prior quarter.
Respondents’ third quarter assessment of future conditions also softened. Sixty percent of CEOs said they expect economic conditions to improve over the next six months, down from 88 percent. Nine percent expect conditions to worsen, up from 1 percent in the prior quarter. And only 65 percent of CEOs anticipate short-term prospects in their own industries, down from 81 percent in the prior quarter. Six percent said they expect conditions to worsen, up from 4 percent in the second quarter.
While companies are looking to hire workers, they are also finding it hard to fill open positions.
“Businesses are out of pandemic survival mode and eager to expand, invest, and hire,” Roger W. Ferguson, Jr., vice chairman of The Business Council and Trustee of The Conference Board, said. “This has accelerated a return to the severe labor shortages seen before the pandemic—now exacerbated by the virus’s stubborn persistence, which has kept many workers unable or reluctant to reenter the workforce.”
Sixty percent of CEOs expect to expand their workforce, up from 54 percent in the second quarter. Seventy-four percent reported difficulties in finding qualified workers, up from 57 percent in the prior quarter. And 66 percent said they expect to increase wages by 3 percent or more over the next year, up from 37 percent of respondents in the prior quarter.
ADP on Wednesday said private sector employment increased by 568,000 jobs from August to September. Hirings in August was downwardly revised to 340,000 from the payroll firm’s initial reading of 374,000. September’s tally is still below the current peak reached in May this year when 882,000 new jobs were added to private payrolls.
In the goods-producing sector, manufacturing in general contributed 49,000 to September’s job growth data. In the service-providing sector, education and health services led the charge. Retail is not a listed category. In other services, where retail likely fits in, only 28,000 jobs were added in September.
More retail jobs are expected to be added in the months ahead. Macy’s, Target and Walmart have all said they will be adding workers and while many will be seasonal, some positions will evolve into permanent positions, both full-time and part-time.
In another bit of good news on the jobs front, first-time jobless claims for the week ended Oct. 2 fell to 326,000, ending three straight weeks of rising unemployment claims.