U.S. business leaders are indicating significant improvement in their overall optimism about business performance, stability, profitability and hiring expectations in the first quarter of the year, compared to the pessimistic outlook during the fourth quarter of 2012, according to a new report from Grant Thornton.
In addition, global optimism increased to its highest level since early 2011, according to the report, with both China and Japan showing drastic increases in their optimism figures.
The Grant Thornton International Business Report surveyed over 3,200 business leaders in 44 countries about business sentiment. In the first quarter of 2013, optimism among U.S. business leaders rose from -4 percent to 31 percent.
This finding accompanies survey data revealing an improvement in sentiment about most areas of business performance and stability. The net percent balance of US business leaders who anticipate revenues to increase in 2013 rose by eight percentage points from the fourth quarter. In addition, profitability expectations increased sharply in the first quarter, up 14 percentage points from the previous quarter. Encouragingly, hiring expectations in the U.S. remain above the global average. A net balance of 29 percent of business leaders in the U.S. foresee an increase in hiring during the coming year, a four-percentage point increase from the previous quarter and five percentage points above the global average.
“With the fiscal cliff and presidential election behind us, the anxiety has seemingly lessened among business executives,” said Grant Thornton LLP CEO Stephen Chipman in a statement. “While uncertainty is still present, it’s encouraging to see such a large increase in optimism among the nation’s business leaders—particularly when it comes to employment, which is key to US economic health.”
The increase in optimism in the U.S. economy is on par with what is occurring in other markets, with global business optimism up to its highest level since early 2011. Globally, a net balance of 27 percent of businesses are optimistic about the economic outlook, up from just 4 percent from the previous quarter. Following the U.S., the next two largest economies in the world also saw sentiment improve. Business optimism in China increased from a net balance of 19 percent to 29 percent while Japan saw a major increase in optimism, from a net balance of -70 percent to -2 percent.
Still, there are some areas for improvement. Despite a modest uptick from the previous quarter, few U.S. businesses plan to invest in research and development in 2013, with a net balance of only 12 percent expecting an increase during the next 12 months. In addition, 36 percent of the U.S. business leaders polled cited regulations and red tape as the number one factor stopping them from growing their operations in the next 12 months.
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