Grant Thornton said it is seeing signs of an improvement in business confidence, based on the results of a quarterly survey it has been conducting with BusinessWeek.
The firm's Business Optimism Index rose slightly, the first increase since summer 2007, but the index is still at its second-lowest level since 2002. The quarterly confidence measure of U.S. business leaders has risen slightly from 54.9 in November to 56.3 at the end of February.
The survey of 300 senior executives found that confidence among U.S. business leaders was up slightly as it related to their outlook for the U.S. economy for the next six months, and optimism for their own businesses over the next six months. In addition, the number who said that they planned to decrease staffing dropped from 13 to 10 percent, while those who had no plans for reductions increased from 50 to 53 percent.
The results belie the general pessimism about the economy, but Grant Thornton CEO Ed Nusbaum (pictured) believes the executives interviewed in the survey are "well-tuned into the economy from the perspective of their collective experiences with their individual companies."
"It's interesting that last summer these executives expressed decreasing economic optimism through our Business Optimism Index well before the bad news began hitting The Wall Street Journal," he added. "The Grant Thornton Business Optimism Index reflected even greater pessimism last fall. Now, in March, it seems that business leaders' degree of pessimism has bottomed out, probably reflecting what they are seeing in their own companies' businesses."
He pointed out that much of the economic news in newspapers, on TV and online reflects what executives began seeing months ago from their own perspective, and that the economic trends varied by industry. "This is an unusual recession in that it is industry-selective," said Nusbaum. "While housing and financial institutions are severely affected, sectors like agriculture and energy are, on the average, doing just fine."
The index showed that the proportion of business executives who believe the U.S. economy will improve increased from 17 to 19 percent between November 2007 and February 2008, while those who believe the U.S. economy will worsen declined from 28 to 24 percent. Those executives who are optimistic about their own businesses increased from 73 to 75 percent, while those who were pessimistic about their own businesses declined from 25 to 23 percent.
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