Heightened unemployment concerns, continued expectations for a double-dip recovery, and high levels of economic uncertainty have dampened optimism by finance professionals, according to a new survey.
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The quarterly poll of financial executives by Adaptive Planning and the Business Performance Innovation Network found that 41 percent predict a W-shaped recovery, similar to last quarters 46 percent. Nearly all finance executives (99 percent) expect meaningful jobs growth will not occur until next year or beyond. Respondents have pushed back their expectations for the timing of this jobs recovery, with 38 percent expecting jobs growth will not occur until 2012 two quarters later than the previous survey. Moreover, finance executives consider unemployment to be the single greatest concern for the overall US economy, with 68 percent citing it among the top challenges.
The majority view current economic conditions as the same (46 percent) or better (30 percent) than they were six months ago; however, only 36 percent of financial executives believe economic conditions will improve over the next six months. This marks the third consecutive quarter in which optimism has declined relative to the previous quarter. Similar to the last survey, which was the highest negative reading since March 2009, 20 percent expect that the economy will be in worse condition in six months.
Despite consecutive quarters of economic stabilization, unemployment concerns continue to significantly impact the expectations of a significant percentage of finance executives, said Adaptive Planning CEO William A. Soward. We have seen a steady erosion of optimism and continuously high levels of economic uncertainty in recent polls. This is particularly concerning, because even if their expectations do not come to pass, the sentiment of finance executives undeniably affects company outlook, forecasts, and decision making.
Respondents from small companies have a more pessimistic outlook than those from larger companies. Twenty-four percent from small companies expect conditions to worsen over the next six months, compared to only 18 percent from midsized or large companies.
One bright spot is that the company-specific outlook for jobs growth over the next six months is slightly more optimistic than the predictions for the broader economy, with more respondents expecting jobs growth at their own companies (26 percent) versus jobs losses (23 percent).
The economic outlook continues to be highly uncertain, with a 53 percent of finance executives reporting high or very high levels of uncertainty. This uncertainty has remained extremely high since Q1 2009, and continues to drive more frequent re-forecasting and scenario planning. Fifty-six percent expect to increase the frequency of their re-planning and what-if analysis next quarter.
The top concerns of finance executives for their own companies remain consistent with prior surveys. Demand for products and services, credit and financial market stability, and unemployment remain the top concerns for the next six months, with healthcare reform and Euro zone concerns falling since the last survey.