NEW YORK, Jan. 5, 2017 /PRNewswire/ — Deloitte’s fourth quarter (4Q 2016) CFO Signals survey, which opened the day after the election on Nov. 9, 2016, reveals that all eyes are on the next U.S. administration, with 73 percent of surveyed chief financial officers expecting less congressional gridlock. Additionally, CFOs generally anticipate substantial policy changes to take place in the next four years in the areas of taxes, repatriation of cash to the U.S., infrastructure investments, health care and immigration:
By contrast, less than 10 percent of the surveyed CFOs predict Congress will pass trade deals with either Europe or Asia respectively.
“CFOs appear to be anticipating substantial changes in policy which will certainly affect their companies. As the new administration’s agenda unfolds and CFOs gain more clarity, it will be interesting to see how CFOs’ optimism and expectations change,” said Sandy Cockrell, national managing partner of the U.S. CFO Program, Deloitte LLP. “For example, despite appearing to be fairly bullish on North America’s economy—and U.S. CFOs indicating higher optimism about their own companies’ prospects than in the last two years—there are concerns about topics, such as tax uncertainty and the possibility of a rising national debt.”
This quarter reveals a sharp contrast between rising optimism regarding own company prospects and all four business outlook metrics tracked by the CFO Signals survey for 27 consecutive quarters. Net optimism in 4Q 2016 remains strong at +23.4, and 43 percent of CFOs express rising optimism about their own companies’ prospects, up from 35 percent last quarter. Net optimism for the U.S. also rose sharply from last quarter’s +16.0 to +34.0 this quarter.
On the other hand, CFO expectations for growth in revenue, earnings, capital spending and domestic hiring all remain near their survey lows.
In particular, U.S. CFOs’ expectations for revenue, earnings and capital investment all came in near historic survey lows.
Each quarter, CFOs are also asked which risks they regard as most worrisome. The top three external risks CFOs cited this quarter are: 1) uncertainty about the new administration; 2) a tie between the impact of protectionism on global trade and global growth/recession; and 3) new/burdensome regulation. Like last quarter, securing qualified talent tops the list of internal risks cited, followed by execution of strategies and plans in second place, and retaining key employees and controlling costs and expenses, tied for third.
When asked about expectations for the macroeconomic environment in 2017, 58 percent of U.S. CFOs agree that the U.S. economy will improve over the next year, but only 14 percent of Canadian CFOs expect their economy to improve. No Mexican CFOs expect better conditions for Mexico’s economy.
In their assessment of broader regional economies, 43 percent of CFOs say current conditions in North America’s economy are good compared to 46 percent last quarter, while 58 percent expect better conditions in a year, up from 37 percent last quarter. Eight percent of CFOs perceive Europe’s current economy as good, up from 4 percent last quarter; 13 percent expect better conditions a year from now, slightly higher than last quarter’s 10 percent. Perceptions of China’s economy improved with 24 percent of CFOs describing it as good, up from 10 percent last quarter, and 17 percent expecting conditions to improve, up from 14 percent last quarter.
When asked about their industry expectations in 2017, surveyed CFOs are mostly optimistic about their industries’ growth, with 54 percent expecting their revenue to grow, and more than half anticipating technology advances to be a major factor in changing both industry products and services and how their industry operates. Sixty-six percent of CFOs expect that industry-skilled talent will be difficult to acquire, and 67 percent believe wage increases will be necessary to secure and retain highly skilled workers.
“This quarter’s findings show high industry and country variability in sentiment and expectations,” commented Greg Dickinson, managing director, Deloitte LLP, who leads the North American CFO Signals survey. “But expectations were very diverse even within particular regions and industries, which seems to indicate inconsistent ideas about how the new administration will proceed and how worldwide markets will respond.”
Additional findings from the Deloitte 4Q 2016 CFO Signals survey include:
“CFOs’ views about the changing economic environment are similar to those of economists, as reflected in Deloitte’s recent US Economic Forecast,” says Danny Bachman, senior U.S. economist, Deloitte Services LP. “The unexpected results of the presidential election have introduced greater uncertainty about policy in areas such as trade, infrastructure spending, taxes and regulation – with an unusually wide range of possible impacts for business.”
Deloitte’s fourth-quarter 2016 CFO Signal’s survey also provides CFOs’ responses on business focus priorities, expectations for capital, strategy and leadership, and more. To download a copy of the survey, please visit: www.deloitte.com/us/cfosignals2016Q4.
About The Deloitte CFO Signals™ survey
Each quarter, CFO Signals tracks the thinking and actions of CFOs representing many of North America’s largest and most influential organizations. This report summarizes CFOs’ opinions in four areas: business environment, company priorities and expectations, finance priorities and CFOs’ personal priorities.
The Deloitte CFO Signals survey for the fourth quarter of 2016 was conducted during the two-week period opening Nov. 9 and ending Nov. 23, 2016. A total of 137 CFOs responded during this time. Seventy-two percent of respondents are from public companies, and 84 percent are from companies with more than $1 billion in annual revenue. For more information, please see the report.
For more information about Deloitte’s CFO Signals, or to inquire about participating in the survey, please contact NACFOSurvey@deloitte.com.
About Deloitte’s CFO Program
The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands. The program harnesses our organization’s broad capabilities to deliver forward thinking and fresh insights for every stage of a CFO’s career—helping CFOs manage the complexities of their roles, tackle their organization’s most compelling challenges and adapt to strategic shifts in the market. For more information about Deloitte’s CFO Program, please contact firstname.lastname@example.org or visit www.deloitte.com/us/thecfoprogram.
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