In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Wednesday, March 07, 2012

CFO Survey: U.S. Employment Growth to Accelerate

by Calculated Risk on 3/07/2012 02:10:00 PM

From Duke University and CFO Magazine: CFOs: Outlook Improves, U.S. Employment Growth to Accelerate

The employment outlook has brightened, with U.S. finance executives expecting to increase their number of domestic full-time employees by 2.1 percent.

“The expected increase in employment is a welcome improvement over last quarter’s 1.5 percent forecast growth rate,” said Kate O’Sullivan, director of content development at CFO Magazine. “It indicates that national unemployment should fall below 8 percent in 2012.”

More than two-thirds of U.S. CFOs say their companies are currently trying to fill vacant positions.
The U.S. CFO Optimism Index, in which CFOs rate their confidence in the economy on a scale of 0 to 100, increased from 53 last quarter to 59 this quarter, equaling the index’s long-term average.

“This rebound is encouraging because increases in CFO optimism have historically preceded improvements in the overall economy,”said John Graham, a professor of finance at Duke’s Fuqua School of Business and director of the survey. “Optimism also rebounded in Europe and Asia, suggesting that 2012 should be a better year than 2011.Still, European optimism lags behind the rest of the world.”

CFOs cite weak consumer demand, intense pressure on profit margins, and the difficulty in attracting and retaining qualified employees among the top concerns for their companies.
In March 2011, CFOs in this survey only expected to increase full time employees by 1.2% over the next 12 months, so 2.1% is a solid increase.

Looking back at past results, CFOs expected to increase full time employment by 0.5% in March 2008 (the recession began in December 2007), and they had turned very pessimistic by December 2008 when they expected employment to fall by 5.0% over the next 12 months.

Note: CFOs of public companies expect earnings to grow at a slower pace this year (7.5%). Last year CFOs expected earnings growth of 18%.