The overall outlook for the U.S. economy continues to improve and may be gathering steam despite a few global uncertainties and mixed signals from the Federal Reserve, according to the latest CNBC Global CFO Council survey.
That's an improved outlook over the last two surveys of the council, a group of chief financial officers representing a broad swath of the economy and overseeing more than $2 trillion in market capitalization. Members of the council come from a wide range of sectors, including retail, banking, energy, technology and transportation. CNBC surveys this group of 25 CFOs on a regular basis.
Two-thirds of the council expect their revenues will increase in the second half of 2013, while over 50 percent said that their margins will increase in the last two quarters of FY 2013. And in their most positive signal yet, over 80 percent said they expect their capital expenditures to increase by at least 7 percent year over year in 2014. Despite these numbers, only about a third reported slight increases in hiring plans in 2013.
The council's interpretation of Federal Reserve Chairman Ben Bernanke's stimulus intentions showed its members are not as certain as some market pundits that the Fed will reduce stimulus this year, with CFOs expecting the tapering to take hold by the first quarter of 2014. The council remains divided on whether the tapering will extend past the fourth quarter of 2014. Yet overwhelmingly, over 80 percent think the Fed should maintain current policy at the next Federal Open Market Committee meeting.
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More CNBC Global CFO Council survey insights:
- CFOs confirmed the corporate bond market is becoming a less attractive financing option.
- After reporting in the last survey their first priority for capital expenditures is information technology, CFOs reported that most of those funds are going to cloud services, big data analytics and cybersecurity.
- Even though CFOs do not expect significant hiring changes, over 70 percent said that total employee compensation in FY 14 will increase over 2013, net inflation.
- The No. 1 risk concern for their boards is management succession plans, closely followed by reputation management, regulatory compliance and cyberattack.
- Over half said that spending momentum by both consumers and enterprise is trending positively.
- As for the global economy, CFOs are most enthusiastic about economic growth in the U.S., while slightly less than 50 percent see a continued softness in China's growth prospects.
The complete results of the CNBC Global CFO Council Survey can be found below.
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8. What best describes your view today of the corporate bond market as a financing option versus six months ago?
|Slightly less favorable||84.0%|
|Slightly more favorable||8.0%|
12. What best describes your anticipated levels of total compensation for your firm's employees in FY 2014 as compared to FY 2013—net inflation?
21. Should the Financial Accounting Standards Board (FASB) have the authority for standardizing all public company and third-party generated performance metrics reported to investors?
22. For the second half of FY '13, what best describes margin levels (year over year) for your firm and/or sector's products/services?
—By Richard Brenner, Special to CNBC.com.