CEOs Express Optimism for 2007 Economic Growth: Sales and revenues continue to climb and profits are steady
media contact:
Tony Vignieri
Vistage International
858.509.5882
tony.vignieri@vistage.com
San Diego, CA (March 13, 2007) - Chief executives of small and mid-sized businesses believe 2007 will be a good economic year, according to the national Vistage CEO Confidence Index, a quarterly measure of economic, market and industry trends. Brisk sales in the first quarter, along with increased revenue, point to a steady growth year. Nearly 2,000 CEO members of Vistage International, the world's leading chief executive organization, responded to the Q1 2007 survey.
The Vistage CEO Confidence Index rose to 95.4 in Q1 2007, up from 93.0 in the fourth quarter of 2006. Firms believe the economic slowdown has nearly run its course and expect a positive pace of economic growth to persist during the year ahead.
"Executives are generally more optimistic now than in late 2006," said Richard Curtin, Ph.D., a consultant for the Vistage CEO Confidence Index and director of consumer surveys at the University of Michigan. "CEOs expect an economic expansion to continue for the balance of 2007, despite uncertainties from the housing slump, higher energy prices and record consumer debt."
CEOs anticipate profits will remain steady but not grow substantially due to a greater resistance to price increases among customers and the rising costs of business. Tight labor markets remain the most significant challenge reported, with more than one-third of all firms providing higher compensation, bonuses, or benefits to attract and retain qualified employees. Unqualified support for a higher minimum wage was voiced by 40 percent of all CEOs, while another 23 percent would support a higher wage only if accompanied by tax breaks for businesses.
"Despite market corrections and other uncertainties, CEOs are a resilient group," says Dan Barnett, chief operating officer, Vistage International. "Smaller firms expect the economy to continue to improve throughout the year and they are betting on that with new hires and additional spending."
Economic Growth
Although firms were more optimistic than in late 2006, the extent of the gains was small. Twenty-five percent expect improved economic conditions in early 2007 and throughout the year. However, uncertainties about the housing market and the financial health of consumers could slow the pace of economic growth.
Staffing Remains Critical
Once again, finding and hiring qualified staff was cited as the most critical challenge for more than one-third of all firms. Higher wages, enhanced benefit packages and more perks were offered by half of all firms. Another one-in-five firms offered more flexible hours and the ability to work from home.
Investment Plans Cautiously Optimistic
Planned investments rebounded in the first quarter of 2007, regaining the losses recorded in the second half of 2006. Although nearly half of all firms planned higher fixed investment spending at the start of 2007, this was still below the figures recorded in early 2006 and early 2005. The growth in fixed investment spending was restrained by higher labor costs as well as by smaller price increases.
Restrained Revenue and Profit Growth
Increased revenues and profits were expected by the vast majority of firms but not at significantly increased levels. The profit squeeze has been due to both higher costs of business as well as less pricing power in the marketplace. Firms gave mixed reviews of the effectiveness of their marketing plans, with 40 percent reporting that they were very satisfied or satisfied, 24 percent giving neutral ratings, and 25 percent saying that they were only somewhat satisfied or not at all satisfied.
CEOs Increasingly Research Job Candidates via the Internet; Slow to Join Social Networking Craze
Nearly a quarter of all CEOs surveyed (21 percent) report having conducted Internet searches via MySpace, Facebook or Google when researching job candidates. However, executive participation in social networking sites remains low, with only four percent participating in MySpace and one percent in Second Life.
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About the Vistage Confidence Index
U.S. small and mid-sized businesses represent the most vital component of the nation's economy. This sector creates 75% of all new jobs and generates 50% of all national revenue. The opinions of these business leaders provide a clear snapshot of current economic, market and industry trends and demonstrate their plans for growth over the next 12 months. These insights provide a leading indicator for employment, capital expenditure, sales and revenue trends.
The Q1 2007 Vistage CEO Confidence Index is a compilation of responses from 1,943 CEOs of small- to mid-sized companies, surveyed February 20 – March 2, 2007, with a margin of error of 1.9 percentage points. The Vistage CEO Confidence Index is the only comprehensive report of their opinions and projections.
about Vistage International
Vistage International and its affiliates have more than 13,500 members in 15 countries representing the world’s leading chief executive organization based on revenue. Vistage members generate nearly $300 billion in annual revenue and have more than 2.1 million employees around the world. Vistage is dedicated to increasing the effectiveness and enhancing the lives of chief executives. Member companies are better run and grow their revenues, on average, at twice the percentage growth rate after joining Vistage.
Vistage International includes operations in the United States, the United Kingdom, Ireland, Mexico and the Netherlands. Vistage affiliates include TEC, The Executive Committee and The Executive Connection in the following areas: Florida, Michigan, Wisconsin, Argentina, Australia, Brazil, Canada, Chile, Germany, Malaysia, New Zealand, Singapore and South Africa.