Global executive leaders are starting to feel they’ve got a better handle on the health crisis that has rocked nearly every industry in 2020.
A new report today from The Conference Board in collaboration with The Business Council, found that CEO confidence rose sharply in the final month of Q3, after a moderate increase in the first month of the quarter. The measure stands at 64, a significant improvement from 45 — with readings above 50 points reflecting more positive than negative responses from those surveyed.
What’s more, business leaders’ assessment of general economic conditions improved significantly compared to the start of the period: 70% of CEOs reported economic conditions were better compared to six months ago, up from 8%. Conversely, only 21% say conditions are worse, down from 90%. Chief executives also indicated greater optimism about conditions in their own industries compared to earlier in Q3: 69% said conditions in their industries were better compared to six months ago, up from 17 percent. Meanwhile, 20% said conditions were worse, down from 76 percent.
All of that optimism is adding up to bigger plans for capital spending: 25% of CEOs anticipate increased spending over the next 12 months, up from 15% earlier in the quarter. And 36% predicted upward revisions in capital spending beyond the next 12 months.
Still, it doesn’t mean that CEOs will invest that extra cash in hiring or doling out bonuses and raises. According to The Conference Board, leaders painted a more mixed picture of employment: Hiring plans have tapered and the potential for layoffs are persistent — with one-third of CEOs saying they anticipate reducing their workforce over the next 12 months. Meanwhile, 21% of CEOs foresee no increase in their employees’ wages and 5% indicate they may actually reduce wages.
“CEOs entered Q4 significantly more upbeat than they were earlier this year,” said Dana Peterson, chief economist of The Conference Board. “Notably, talent shortages eased in the wake of COVID-19 and nearly two-thirds of business leaders said they anticipated little, if any, problems with attracting qualified workers. Nonetheless, uncertainty around the pandemic—and its aftermath — remains a risk to Q4’s newfound optimism as we enter 2021.”
Indeed, coronavirus cases are surging all across the United States this week, threatening to upend reopening plans and spur renewed restrictions on nonessential businesses and activities.
Asked to predict the pandemic’s most important long-term impact on businesses, more than 8 out of 10 CEOs surveyed by The Conference Board listed accelerating digital transformation among the key legacies of COVID-19. Additionally, 48% cited increased demand for transparency in communication and information-sharing across organizations.
“CEOs across industries continue to adapt to COVID-19’s new normal,” said Roger W. Ferguson, Jr., vice chairman of The Business Council and Trustee of The Conference Board. “While Q4 saw a resurgence of optimism, leaders are also cognizant of — and planning for — what may be permanent shifts in consumer preferences and organizational expectations ahead.”
More than 8 million people in the U.S. have been infected with the coronavirus and more than 220,000 have died. Global markets have seesawed in tandem with COVID-19 infection rates as investors and industry leaders eye vaccine news, unemployment rates and turbulent discussions over a second stimulus package in the U.S.