CFOs’ expectations for revenue, earnings, capital spending and domestic hiring declined in the first quarter and are at a nearly six-year low, according to a new survey from Deloitte.

Deloitte’s quarterly CFO Signals survey found that revenue growth expectations among CFOs fell to 3.3 percent from 5.9 percent in the fourth quarter of last year. Earnings growth expectations fell to a new survey low of 6.0 percent from 8.3 percent last quarter, capital spending expectations hit a new survey low of 1.7 percent from 4.9 percent last quarter, and domestic hiring growth expectations declined sharply to just 0.6 percent, from last quarter’s 1.2 percent, matching the previous survey low.

While assessments of the North American economy had been a steadying influence for many quarters, those now appear to be faltering as well, according to Deloitte, with CFOs’ confidence about the trajectory of the economy hitting its lowest level in three years. In addition, CFOs’ assessments of China hit another new survey low. Forty-one percent of CFOs now describe North American conditions as good (down from 55 percent last quarter), and only 36 percent expect better conditions in a year (down from 47 percent last quarter). Only 9 percent regard China’s economy as good and just 5 percent describe Europe’s economy as good.

“This quarter marked a decidedly downward turn in CFOs’ sentiment, and a rocky start to 2016 appears to have taken its toll on expectations for company prospects and confidence in major economic zones,” said Sanford Cockrell III, national managing partner of the U.S. CFO Program at Deloitte LLP, in a statement. “If equity markets remain volatile, and if we continue to see uninspiring reports on the performance of major economic zones, we may continue to see low CFO confidence for some time.”
The survey, which tracks the thinking and actions of more than 100 CFOs from large North American companies, has recorded 13 straight quarters of positive net optimism, but this quarter’s reading of +1.7 declined significantly from last quarter’s +10.7 and is at its lowest level since Q4 2012. In the same quarter one year ago, net optimism was recorded at +34.4.

“One difference this quarter seems to be CFOs’ growing concern over how financial markets will react to unfavorable economic news and how consumers will react to volatile equity markets — and what longer-term effects will be on capital liquidity and consumer demand,” said Greg Dickinson, director, Deloitte LLP, who leads the North American CFO Signals survey. “Past surveys have shown that election run-ups tend to have a rather negative impact on CFO confidence, and in previous election years, net optimism had turned negative into the third and fourth quarters.”

One potential bright spot in CFO sentiment is that more of the CFOs who were surveyed this quarter believe U.S. equity markets are undervalued than overvalued. Only 30 percent of the CFOs surveyed said U.S. markets are overvalued, a sharp decline from 56 percent last quarter (note that the S&P 500 index averaged 1,865 while the survey was open, about 8 percent below the average level during the Q4 2015 survey, but has since rebounded).

The top risks cited by CFOs show very strong concerns about the interplay of economic volatility, financial markets and consumer confidence. The top two risks cited overall were external: global economic performance (growth, recession and volatility), followed by oil/commodity prices. There was a three-way tie for third place between two additional external risks—capital market risks (liquidity and stability) and the possibility of new/burdensome regulations. The dominant internal risk related to the talent category: growing concerns about retaining key employees. 

Nearly half of the CFOs polled said their companies are politically active, although the level and scope of activity is industry dependent. Sixty percent of politically-active companies cited use of a single contribution method (e.g., donating to PACs, candidates and causes). Overall, companies appear more focused on causes than on candidates. Energy/resources CFOs indicated the highest and broadest-based political activity.

To download a copy of the survey, visit

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