The chief financial officers of major US companies are optimistic about the near-term future in 2018’s second quarter, according to a survey released today by Deloitte, the professional services giant.
The quarterly poll indicated that CFOs believed now was a good time to take risks, with 58% agreeing, although that was down from the previous quarter’s 69%. But they wanted to concentrate more on organic growth—as opposed to buying other companies.
In geographical terms, CFOs were most optimistic about the North American economy, with 94% rating current conditions as good, a high for the 8-year-old survey. Sentiment was less optimistic about Europe, which recently has faced political turmoil.
“They want to stay in their own geographic” area, said Sandy Cockrell, Deloitte’s global CFO program leader. “It’s significant that nine in 10 say the North American economy is good or better than good.”
That said, the CFOs were not as sanguine about their own companies’ prospects, which declined to 39% this quarter, from 54% in the winter. The survey, taken in mid-May, was at the outset of current international tensions over trade. The companies in the poll all have overseas operations, which could be hampered by continued trade tumult.
Before 2017, CFOs worried most about slow economic growth. But with the recent pickup in US growth, their concerns have shifted more toward how they will capitalize on opportunities and fend off threats to performance. There’s a strong tilt to revenue growth over cost reduction, 67% versus 17%, which is a reversal of previous years.
Interestingly, the CFOs had a strong affinity for investing corporate cash to expand their businesses, over returning it to shareholders (56% to 18%). Capital spending at last has moved up after years of stagnation, although so have stock buybacks.