Although CEO confidence improved during the first quarter in 2012, it fell from 63 to 47 in the second quarter, according to the Conference Board Measure of CEO Confidence.
A figure of more than 50 points represents positive responses.
“CEOs began the year quite upbeat, but the lackluster performance of the economy so far and expectations of more of the same have clearly impacted attitudes,” says Lynn Franco, director of economic indicators at The Conference Board. “On a positive note, CEOs remain confident profits will continue to increase, driven primarily by market/demand growth.”
The report also finds that only 17 percent of claim conditions have improved when looking at six months ago, which is a drop from 67 percent last quarter. Appraisal of respondents’ own industries has also fallen as just 22 percent of respondents say conditions have improved as opposed to 42 percent in the first quarter of this year.
For the short term, CEO optimism has also declined from last quarter with only 20 percent of respondents anticipating economic conditions to improve over the next six months, which is a drop from 59 percent in the first quarter. Another 25 percent of respondents believe conditions will improve in the coming months, down from approximately 44 percent last quarter.
Still, 64 percent of respondents expect profit increases, and executives in the durable and nondurable industries are the most optimistic as 71 percent anticipate higher profits. Sixty-two percent of respondents in the service industry predict an increase in profits.
Of the respondents expecting profit increases, 46 percent say market and demand growth will be the main driving force. Twenty-nine percent of respondents expect cost reductions to be the primary driver while 15 percent of respondents say new technology will play the main role. The other 10 percent say price increases will act as the primary driver.