U.S. CFOs Remain Cautious About the Economy in Bank of America Merrill Lynch
2013 CFO Outlook
Economy Gets Higher Scores Than in 2012 Survey, but Executives Still Concerned
CHARLOTTE, N.C. -- February 8, 2013
Financial executives at U.S. companies continue to be concerned about the
economy, with only two out of five executives expecting growth in 2013,
according to the Bank of America Merrill Lynch 2013 CFO Outlook.
The 602 executives who participated in the 15th annual survey gave the U.S.
economy an average score of 49 out of 100, up from 44 in the 2012 report. CFOs
gave the global economy a score of 45, up from 43 a year ago.
Optimism about economic growth remained muted, with only 39 percent of CFOs
predicting expansion in 2013, compared with 38 percent last year. Perhaps more
telling, 24 percent of executives said they expect the economy to contract
this year, up significantly from 11 percent in 2012.
“It is clear that uncertainty continues to linger among CFOs, which is
understandable given the broader economic issues both in the U.S. and
overseas,” said Alastair Borthwick, head of Global Commercial Banking at Bank
of America Merrill Lynch. “Until they see solid evidence of stability, CFOs
will be guarded in their optimism and growth plans. Expansion still is
possible but may be limited in the short term to certain industries and
Despite concerns about contraction, most CFOs expect their companies to avoid
layoffs in 2013. Only 8 percent predicted a reduction in workforce, compared
with 7 percent last year. Meanwhile, 48 percent said they expect to maintain
the current number of employees, while 45 percent said they expected to hire
employees. Both responses are similar to last year’s survey.
In Oregon, retailer Coastal Farm & Ranch is exploring the possibility of
adding to its 12 stores this year. If that expansion happens, the company
would need to hire more employees to meet increased customer demand. “With
more homeowners choosing to grow their own produce or raise chickens and other
animals for food, we’ve seen more interest in our products and services,” said
Buzz Wheeler, Coastal Farm & Ranch’s chief executive. “Many people still may
be worried about the overall economy, but we’re optimistic this year will
bring plenty of opportunities.”
One area of significant growth in the latest CFO Outlook was international
activity, with 73 percent of CFOs saying their companies are involved in
non-U.S. markets. That’s up from 54 percent in the previous annual survey, and
executives reported increased buying from non-U.S. markets (62 percent vs. 47
percent last year), selling to non-U.S. markets (55 percent vs. 34 percent)
and operations in non-U.S. markets (30 percent vs. 15 percent).
“Companies across the U.S. are doing more business around the world, which
adds another dimension to their financial needs,” Borthwick said. “We’ve seen
this expansion and diversification with many Bank of America Merrill Lynch
clients, who value their access to our expertise in providing global solutions
at the local level.”
Other notable findings in the 2013 CFO Outlook:
*Among potential impacts on the U.S. economy, the effectiveness of U.S.
government was listed as a concern by 64 percent of executives. In
addition, 63 percent listed the U.S. budget deficit and 62 percent listed
*The top financial concern for CFOs’ own companies was healthcare costs,
chosen by 58 percent. That was followed by revenue growth at 43 percent
and cash flow and corporate tax rates, both at 34 percent.
*Regarding revenues and profits, 56 percent of CFOs expect revenue growth –
same as last year – while 40 percent anticipate a growth in profit margin,
down slightly from 41 percent last year.
*Only 17 percent of CFOs expect their companies’ borrowing needs to
increase in 2013, down from 28 percent in 2012, while 17 percent expect
those needs to decrease, up from 12 percent.
*Regarding financing, 19 percent of executives expect the cost of capital
to increase, down from 21 percent last year.
*M&A activity could pick up slightly, with 22 percent of CFOs saying they
expect to participate in a merger or acquisition in 2013, up from 18
percent a year ago.
*CFOs increasingly expect labor costs to rise, with 72 percent predicting
higher costs per employee, compared with 58 percent last year.
*The top reasons CFOs cited for not hiring additional employees in 2013
were insufficient customer demand (56 percent), uncertainties about higher
healthcare and insurance costs (32 percent), and worries about the
sustainability of the economic recovery (29 percent).
Now in its 15^th year, the CFO Outlook is conducted by Granite Research
Consulting and helps Bank of America Merrill Lynch better understand how
financial executives view the economy. The results were compiled from
interviews of 602 CFOs, finance directors and other executives selected
randomly from U.S. companies with annual revenues between $25 million and $2
Interviews were conducted from mid-November 2012 to mid-January 2013. The
margin of error is +/-4 percent. The full report will be available in March.
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Reporters May Contact:
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