Sentiment among U.S. chief financial officers climbed in the second quarter to the highest level in four years, even as hiring and spending expectations retreated.
The finance heads’ gauge of optimism about the U.S. economy rose to 60.8 in the period ended May 31, the highest since the first quarter of 2009, according to the Duke University/CFO Magazine Global Business Outlook Survey of 353 companies released today. It was the second-highest reading since 2007.
The brighter outlook didn’t translate into employment or investment plans, the report also showed. The financial chiefs projected payrolls will rise by 0.8 percent over the next 12 months, down from the 2.2 percent increase predicted last quarter. They estimated spending on new technology, such as computers and telecommunications gear, will climb 6.1 percent compared with the 7.8 percent gain projected in March.
“Many firms have not seen this overall outlook trickle down to their firms yet,” John Graham, director of the survey and a finance professor at Duke University’s Fuqua School of Business, said in an e-mail. “Hence, they remain in wait-and-see mode. In other words, they are waiting until demand for their own firm’s products picks up before they will start to increase spending and hiring more.”
Company chiefs also plan to keep more cash on hand, projecting an 8.3 percent increase over the next year, up from the 6.7 percent gain forecast in the first quarter.
“Some firms are of course experiencing a bit of difficulty even as there is some improvement in the economy overall and therefore want to hold onto to cash just in case,” Graham said. “Some smaller firms are having a hard time borrowing due to stricter rules and are also building up cash instead. Finally, some firms may expect that interest rates will soon rise so are saving up cash to avoid borrowing in the future.”