Quarterly CEO Outlook Shows Glimmers of Optimism

NEW YORK—The Conference Board Measure of CEO Confidence, which had increased in the first quarter of 2009, rose in the second quarter.

The statistic improved from 30 last quarter to 55. A reading of more than 50 reflects more positive than negative responses.

“CEOs are considerably more optimistic than last time about the short-term outlook; however, their assessment of current conditions, while also improved, suggests the economy remains weak,” says Lynn Franco, director of the Conference Board Consumer Research Center. “Among those expecting an increase in profits over the next year, the majority see cost reductions as the primary driver.”

CEOs’ assessment of current economic conditions was considerably less pessimistic. Now, 32% claim conditions have improved compared to six months ago, up from 0% last quarter. In assessing their own industries, business leaders were also less negative. Now, 24% claim conditions are better, up from just 1% in the first quarter.

Looking ahead six months, CEOs are more optimistic. Nearly 55% of business leaders expect economic conditions to improve in the next six months, up from approximately 17% last quarter. Expectations for their own industries were also more optimistic, with 45% of CEOs anticipating an improvement in the months ahead, up from 26% last quarter.

Among CEOs who expect profits to increase, 56% believe cost reductions will drive profits up, while 33% cite market/demand growth as the main source of improvement.

The survey polled about 100 business leaders in a wide range of industries.

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