According to two independent surveys commissioned by Grant Thornton, executives are becoming more optimistic regarding the economic outlook for U.S. businesses, despite the problems in Europe and growing concerns from China.
The survey reveals that optimism about the U.S. economy jumped from 26 percent to 36 percent since three months ago when global optimism rose from 34 percent to 36 percent. The figures for those planning to increase hiring grew from 26 percent to 41 percent in the U.S. and 33 percent to 37 percent globally. Those planning to give pay raises above inflation also increased from 5 percent to 11 percent, that figure remains below the global average of 14 percent.
U.S. inflation seems to be continuing with 38 percent of respondents, up from 35 percent of respondents, plan to increase the price of their goods. The global figure is still at 35 percent of respondents. Manufacturing is also seeing improvements as 43 percent of respondents now plan to make investments in plants and machinery. This is up from 28 percent. That figure also grew globally from 37 percent of respondents to 40 percent.
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These findings are in conjunction with Grant Thornton's latest quarterly Business Optimism Index, which surveyed nearly 400 U.S. business leaders. The data shows an increased optimism in the economy as 33 percent of respondents expect for the domestic economy to improve in the next six months compared with just 18 percent in August. In that time, the index increased from 11.8 points to 57.9, representing greater confidence regarding the U.S. economy, business growth and hiring expectations.
Although U.S. optimism is growing, some European countries are losing confidence in their own economies, according to International Business Report findings. In fact, French business leaders' optimism for that country's 12-month economic outlook fell from 31 percent to 11 percent, and more than a quarter of Italian businesses anticipate experiencing revenue drops over the next 12 months with almost one-third expecting to see lower profits. Twenty-eight percent Spanish respondents and 15 percent of French respondents anticipate cutting their work forces.
"In the face of long-term economic uncertainty, the resiliency of the U.S. economy is encouraging," says Stephen Chipman, CEO, Grant Thornton LLP. "However, optimism about growth in the domestic market is tempered by the continuing struggles in Europe and China's reluctant role in stimulating the global economy, which present risks for sustained economic growth here in the U.S."
Regarding confidence, Canadian optimism dropped from 69 percent to 59 percent; French optimism dropped from 31 percent to 11 percent, and Hong Kong optimism dropped from 42 percent to 26 percent. Optimism in mainland China, however, grew from 30 percent to 39 percent, and optimism in India jumped from 69 percent to 75 percent. Among the respondents, the six most optimistic major economies are Brazil at 78 percent, India at 73 percent, Mexico at 64 percent, Germany at 62 percent, Australia at 51 percent and Canada at 49 percent.
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