GE Survey Finds Midsize Companies See Better Economy
GE Capital, one of the biggest lenders to small and midsize U.S. companies this year, said a survey showed most chief financial officers see improved capital access, low to moderate economic growth and “healthy” hiring.
“None of the CFOs expect a double dip, and 84 percent see stable to improving” economic conditions, Dan Henson, who oversees GE Capital in the Americas, a unit of Fairfield, Connecticut-based General Electric Co., said in a telephone interview. “The picture has absolutely improved. You’ve got some moderate to decent growth.”
That’s in contrast to the survey GE Capital commissioned in the first quarter, in which about half of the CFOs queried said they were holding back from large capital purchases amid sluggish orders and stalled access to loans, Henson said.
The latest results are aligned with October’s U.S. jobs statistics, which showed employment rising for the first time in five months, a sign that businesses may be starting to gain confidence in the prospects for a faster pace of growth.
The survey, whose results were released today, comprised 530 chief financial officers drawn from seven industries whose companies had $50 million to $1 billion in annual revenue. Sixty-two percent of the finance chiefs said their companies started hiring in 2010, with 56 percent expecting to continue adding workers through the rest of the year. Transportation CFOs led in anticipated workforce growth.
Cost of Capital
About 86 percent of respondents said they expect low to moderate growth for their businesses in the next few years. Cost of capital should improve, 75 percent said, while 85 percent said the amount of available credit should stay the same or improve.
GE, whose other divisions include the world’s biggest providers of jet engines, power-plant turbines, medical imaging equipment and locomotives, rose 35 cents, or 2.2 percent, to $16.16 at 10:47 a.m. in New York Stock Exchange composite trading. Before today they had climbed 4.5 percent.
The U.S. deficit was the biggest concern, by a 2-to-1 majority, among CFOs across all the industries, except for the health-care financial chiefs, who named health-care reform instead. Eighty-three percent of respondents saw health-care costs having a moderate or significant effect on their businesses.
Buoyed by Trends
The GE Capital Commercial Lending and Leasing unit, with $204 billion in assets and commonly known as CLL, is being buoyed by the trends, taking market share amid fewer competitors, Henson said. In the third quarter, GE said the CLL division as a whole had a 29 percent increase in volume, with $443 million in profit on $4.55 billion in revenue.
CFOs were polled in 30-minute interviews using data from Dun & Bradstreet Corp., the Short Hills, New Jersey-based business information and database provider, GE said. The respondents weren’t necessarily GE Capital customers.
Seven industries were included: metals, mining and metals fabrication; food, beverage and agriculture; general manufacturing; retail; healthcare; technology and business services; and transportation.
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