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CEO Confidence Rises Again

Thursday, July 11, 2013

Press release from the issuing company

The Conference Board Measure of CEO Confidence™, which had increased in the first quarter of 2013, improved again in the second quarter. The Measure now reads 62, up from 54 last quarter (a reading of more than 50 points reflects more positive than negative responses).  

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “CEO Confidence, much like consumer confidence, posted a strong gain in the second quarter. CEOs are more upbeat about short-term growth prospects in most markets, including Europe, and expectations for India and China remained positive, but flat.”  

CEOs’ appraisal of current economic conditions improved dramatically. Now, 60 percent are claiming conditions are better compared to six months ago, up from 36 percent in the first quarter. Business leaders are also more upbeat about conditions in their own industries. Approximately 40 percent say conditions in their own industries have improved, compared with close to 29 percent last quarter.

CEOs’ short-term outlook also improved significantly. Currently, 60 percent of business leaders expect economic conditions to improve over the next six months, up from 32 percent in the first quarter. Expectations for their own industries are also more positive, with 53 percent of CEOs anticipating an improvement in conditions in the months ahead, up from 33 percent last quarter.  

Global Outlook

CEOs were more positive in their assessment of current economic conditions in the U.S and Japan than last quarter, while sentiment was about the same for Europe, India and Brazil. However, CEOs were considerably more pessimistic about current conditions in China than in the first quarter.

Expectations over the next six months were generally more favorable, with the U.S., Japan and Brazil fairing best. Expectations for Europe edged into positive territory (above 50) and expectations for India and China remained the same.

 

Discussion

By Joe Webb on Jul 11, 2013

A measure of statistical significance of two data series is called the coefficient of determination (or "r-squared"). In social sciences, figures around 40% or higher are considered good. In business forecasting, 75% or higher is considered good. The statistical relationship of GDP and this index is not published, but confidence measures do not fare well when put to the statistical test. I was able to use the Michigan Consumer Sentiment survey and real GDP and got a 0.14%. That's less than 1%. Look for measurements that reflect actual behavior rather than "mushy" stuff like feelings and emotions like confidence is.

 

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