Optimism for the nation’s economic outlook among U.S. business leaders remained strong in the third quarter, according to a new survey by Grant Thornton.
Optimism among U.S. business leaders reached a net balance of 69 percent in third quarter of 2014, U.S. business leaders’ optimism, declining only 5 percentage points from the second quarter, which marked the highest level since 2004. This also reflects a 17 percentage-point increase from the same three-month period one year ago.
The Grant Thornton International Business Report, a survey of more than 2,500 business leaders in 34 countries, found a sharp decline in German business confidence, which plummeted 43 percentage points to just net 36 percent, following a contraction in the German economy in the second quarter of 2014, amid fears of the impact of the Ukraine crisis on trade and the energy supply. The proportion of German firms citing a lack of demand as a constraint on growth has jumped from just 6 percent to nearly one in four.
Expectations for employment in the country have also dropped into negative territory (net -8 percent) for the first time since 2010—the lowest of all 34 economies surveyed.
“We knew that the economic environment in Germany had worsened in recent months, but the severity of the change in outlook by our nation’s largest trade partner within the EU and one of the largest sources of foreign direct investment in the United States has very significant implications for the U.S. economy and businesses,” said Grant Thornton LLP CEO Stephen Chipman in a statement. “While optimism among U.S. business leaders remains relatively high—boosted primarily by recent strong employment and economic growth—we will be watching closely in the coming months to gauge the domestic repercussions of the weakening eurozone.”
Chipman will be stepping down as CEO of the U.S. firm at the end of the year and will be succeeded by J. Michael McGuire, the firm announced in June. Grant Thornton announced last week, however, that Chipman, 52, will be staying on at the firm as senior vice chair, effective Jan. 1, 2015.
Grant Thornton’s IBR survey data reveals an improvement in sentiment about most areas of U.S. business performance and stability. During the past three months, hiring expectations in the United States rose 13 percentage points to a net balance of 47 percent of business leaders foreseeing an increase in hiring in the coming year. Revenue expectations among U.S. business leaders rose to a net balance of 68 percent, up 10 percentage points from the previous quarter and an 18 percentage-point increase from one year ago.
This marks the highest level for both hiring and revenue expectations since 2007. In addition, companies’ plans to invest in research and development has continuously increased during the past two years to net 27 percent, up 16 percentage points from third quarter 2012. Following a 19 percentage-point decrease in second quarter 2014, plans to invest in plants and machinery increased 8 percentage points to net 32 percent.
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