CFOs in North America are feeling more optimistic about the prospects for their companies and the economy as a whole in the New Year, according to a new survey.

Deloitte’s fourth-quarter CFO survey for North America found CFOs to be optimistic about their organization’s prospects for the eighth consecutive quarter. However, as shown by the stock market decline on Monday, uncertainties persist and CFOs remain cautious about domestic external risks and the global economy’s performance.

Sixty-three percent of the CFOs surveyed by Deloitte in the fourth quarter describe the North American economy as good or very good (up from 44 percent in the third quarter), and just 4 percent described it as bad (compared to 3 percent in the previous quarter).

The survey tracks the thinking and actions of more than 100 CFOs from large North American companies. In the fourth quarter of 2014, 49 percent of CFOs expressed improving optimism, an increase from 43.7 percent last quarter and the highest level of optimism for all of 2014.

Only 15.6 percent of CFOs expressed declining optimism, one of the lowest proportions in the survey’s 19 quarter history. Overall, net optimism increased from +32.0 last quarter to +33.3 this quarter.

Domestically, confidence in the North American economy remained high, with 63 percent of CFOs describing it as good or very good, and 63 percent saying conditions would be better a year from now. Optimism was reflected in CFOs’ year-over-year expectations for key metrics. These remained strong, increasing from one year ago, though they declined slightly on a quarter-on-quarter basis.

CFOs did continue to flag some concerns, however. Worries about interest rate movements and shocks rose sharply, while concerns about tax reform continued to increase. Elements of the global economy remained a concern as well, with 73 percent describing the European economy as bad, compared to 47 percent last quarter, and just 13 percent expecting to see it improve over the next year. Views on China remained mediocre, with 34 percent believing the economy is good, and 25 percent expecting improvement in the next year.

Despite global economic concerns, only around a quarter of CFOs said the European and China situations are affecting their business planning. Industry-specific regulation (69 percent), monetary policy (55 percent), geopolitical events (49 percent) and fiscal policy (40 percent) were all flagged by CFOs as having a greater impact on business planning.

CFOs in the energy and resources sector recorded sharp falls in year-over-year earnings and sales expectations. Only 27 percent of CFOs confirmed that energy prices are affecting their pricing.

CFOs described their sources of uncertainty in different ways, depending on what sector their companies occupied. Where most sectors agree, however, is around uncertainty related to geopolitical events, industry-specific regulation and North American economies.

Compared to the third quarter of 2013, companies appear more likely to have used aggressive risk reduction tactics. Use of voluntary lump-sum pay-outs for both retirees and former employees has risen, as have outright retirement plan terminations.

“CFOs hold a positive outlook for 2015, despite domestic and global uncertainties remaining on the horizon,” said Deloitte LLP national managing partner Sanford Cockrell III, leader of the Deloitte CFO Program. “Key metrics look consistently stronger and confidence in the North American economy is increasing. With stronger demand, CFOs appear to have the confidence to raise prices on products and services.”

Despite positive forecasts for key performance metrics, CFOs continued a recent trend by signaling a decline in dividend growth expectations, falling from 4.1 percent to 3.0 percent this quarter. This is the third quarterly decline in a row and the lowest dividend growth expectation in two years.

However, expectations on capital spending, which fell sharply in the third quarter to 5.0 percent, rebounded to 5.5 percent. Forecasts for the U.S., where capital spending forecasts reached a survey low 3.5 percent last quarter, rose to 5.8 percent, though in Canada they declined sharply from 9.7 percent to 2.7 percent.

With company optimism increasing and sales and earnings forecasts remaining strong, 55 percent of CFOs confirmed they will raise prices this year, compared to just 18 percent who say they will be lower. While 72 percent of CFOs expect interest rates to be higher in a year, only one third say this issue is affecting their pricing. Likewise, only 27 percent confirmed that energy prices are affecting their pricing.

To download a copy of the survey, visit

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