The Conference Board's Measure of CEO Confidence, which had posted a sharp decline in the final quarter of 2007, fell again in the first quarter of 2008 and is now at 38 (a reading of more than 50 points reflects more positive than negative responses). The last time the Measure posted a weaker reading was in the final quarter of 2000 when it was at 31.
"CEOs' assessment of current conditions suggests we're still mired in a period of extremely slow growth, and while their short-term outlook moderately improved, they remain quite cautious," says Lynn Franco, director of The Conference Board Consumer Research Center. "As a result, hiring plans have been scaled back and only one in four—compared to four in ten last year—anticipates an increase in employment levels in their industry."
CEOs' assessment of current economic conditions continues to deteriorate, with only 3% stating economic conditions had improved, compared to 7% last quarter. In assessing their own industries, business leaders were slightly less optimistic than last quarter. Approximately 14% claim conditions are better, down from 15% in the fourth quarter.
Looking ahead six months, the outlook improved moderately. Currently, 19% of business leaders expect economic conditions to improve in the next six months, up from 16% last quarter. Expectations for their own industries are also less pessimistic, with nearly 23% anticipating an improvement, up from 17% last quarter.
Hiring Plans Cool in 2008
Only 26% of CEOs anticipate an increase in employment levels in their industry, down from about 42% a year ago. However, the proportion of CEOs who anticipate a decrease eased to 28% from about 32% a year ago.
On a separate question, health care costs remain the major obstacle to hiring new workers. Regulation and litigation costs were second on the list, while wage and salary costs and other fringe benefits were of lesser concern when hiring new workers.
