CEO Confidence Index Surges in Q1 2006 as Economy Continues to Grow

Strategic Insights -

Business leaders of small and mid-sized companies have shown increasing confidence in the economy for the first quarter of 2006, with many anticipating growth opportunities despite concerns about staffing, health care costs, and avian flu pandemic implications. According to the TEC Confidence Index, CEOs expect continued economic gains, but at a slower pace than in 2005. The index level rose to 104.2, a five-point increase from the previous quarter.

Key Takeaways:

  • CEOs have increased confidence in a strong economy, with the TEC Confidence Index rising to 104.2 in Q1 2006, a five-point increase from the previous quarter.
  • Staffing remains the number-one business concern, with 34% of respondents listing it as their top priority, and 28% noting it as their top business priority for the year.
  • 64% of CEOs plan to increase their payrolls, despite difficulty in finding qualified employees, with 60% saying it takes as long as a year ago to hire a candidate.
  • 82% of CEOs expect increased revenues and 69% expect increased profitability over the next 12 months, with 9 in 10 planning to invest or maintain fixed investments.
  • The avian flu pandemic is a growing concern, with 7 in 10 CEOs expecting a negative impact on their business, and only 6% expecting a positive impact.
  • CEOs are split on the best policy to address health care costs, with 37% advocating for consolidated group rates for small businesses, and 26% supporting employee tax credits for contributions.
  • Energy costs are a concern, with CEOs managing increased expenses through strategies such as absorbing costs, passing them along to customers, conserving energy, and outsourcing services.

Statistics:

  • The TEC Confidence Index level rose to 104.2 in Q1 2006, a five-point increase from the previous quarter (p. 1).
  • 34% of CEOs listed staffing as their number-one business concern (p. 2).
  • 60% of CEOs said it takes as long as a year ago to hire a candidate (p. 3).
  • 64% of CEOs plan to increase their payrolls (p. 3).
  • 82% of CEOs expect increased revenues and 69% expect increased profitability over the next 12 months (p. 4).
  • 9 in 10 CEOs plan to invest or maintain fixed investments (p. 4).
  • 7 in 10 CEOs expect a negative impact on their business from the avian flu pandemic (p. 2).
  • 6% of CEOs expect a positive impact on their business from the avian flu pandemic (p. 2).

Sources:

  • TEC International's quarterly CEO survey, the TEC Confidence Index (p. 1).
  • TEC International, the world's largest organization of chief executives (p. 5).
  • University of Michigan, Consumer Surveys (p. 1).
  • Richard Curtin, Ph.D., consultant for the TEC Confidence Index and director of consumer surveys at the University of Michigan (p. 1).