CEO Confidence Increased to a 17-Year High in Q1 2021
Short-term Expectations improved, as CEOs Prepare for Fewer Layoffs and Higher Wages
New York, NY, February 18, 2021 …The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council improved further in the first quarter of 2021, following a sharp increase in the previous survey, conducted in September 2020. The measure now stands at 73, up from 64. This marks the highest level of CEO confidence since Q1 2004, when the measure stood at 74. (A reading above 50 points reflects more positive than negative responses.)
The outlook for employees’ wages has improved, while the potential for layoffs has receded. In Q1, 36 percent of CEOs foresaw increasing their employees’ wages by more than 3 percent over the next 12 months, compared with 22 percent in the previous survey. Moreover, just 12 percent CEOs said they anticipated reducing their workforce over the next 12 months, down from 34 percent. Talent shortages appear to be slowly reemerging: In Q1, business leaders reporting some trouble attracting qualified workers, in key or several areas, increased from 36 percent to 49 percent.
“With the vaccine rollout underway in major economies, CEOs entered 2021 historically upbeat,” said Dana Peterson, Chief Economist of The Conference Board. “They foresee the economy improving further over the next six months. However, setbacks from the pandemic remain a risk to future growth.”
Overall, 82 percent of CEOs expected economic conditions to improve over the next six months, up from 63 percent in the previous survey. The proportion expecting conditions to worsen was cut in half—from 15 percent to 7 percent. Similarly, 78 percent of CEOs anticipate short-term prospects in their own industries to improve, up from 65 percent last September.
“CEOs across industries are planning for life after COVID-19,” said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. “If downside risks are avoided, then this optimism will likely translate into higher wages, employment, and capital spending over the next year.”
CEOs’ assessment of general economic conditions remained positive overall in Q1:
- 67 percent of CEOs reported economic conditions were better compared to six months ago, down slightly from 70 percent
- However, only 10 percent said conditions were worse, down from 21 percent
CEOs remained optimistic about conditions in their own industries in Q1 compared to the prior survey:
- 68 percent of CEOs reported conditions in their industries were better compared to six months ago, unchanged from the September survey
- However, only 8 percent said conditions were worse in their own industries, down from 20 percent
Expectations about the short-term economic outlook improved considerably in Q1 over the previous survey:
- 82 percent of CEOs expected economic conditions to improve over the next six months, up from 63 percent
- Moreover, only 7 percent expected conditions to worsen, down from 15 percent
CEOs’ expectations regarding short-term prospects in their own industries also improved in Q1:
- 78 percent of CEOs anticipated improved conditions in their industry, up from 65 percent
- 7 percent expected conditions to worsen, down from 11 percent
Capital Spending, Employment, Recruiting, and Wages
The survey also gauged CEOs’ expectations about four key actions their companies plan on taking over the next 12 months.
- Capital Spending: 45 percent of CEOs expected to increase their capital budgets in the year ahead, while 15 percent anticipated decreasing spending, compared with 25 percent and 37 percent, respectively
- Employment: 47 percent of CEOs expected to expand their workforce; up from 33 percent in the September survey
- Hiring Qualified People: 50 percent of CEOs expected few, if any, problems finding qualified workers, down from 62 percent
- Wages: 36 percent of CEOs expect to increase wages by 3 percent or more; just 1 percent foresee wage cuts
Source: CEO Confidence Survey, January 2021 / The Conference Board
The CEO Confidence survey was fielded from January 14th through January 29th.