Sector & Size View
Ratings for future business conditions varied widely by industry this month, with CEOs in financial services giving conditions the highest rating at a 6.3/10, up 4 percent since April.
“There was plenty of liquidity in 2020 & 2021, the US treasury and the administration printed $6 trillion. High equity reserves, corporate and individual savings. The wealth transfer for the next 10 to 15 years will be in trillions. There will be a return to reasonable IRR/yields to investment,” says George Gelis, President at Surge Financial Group, Inc. He rates future business conditions as a 9/10.
CEOs in real estate who rate future conditions as the lowest of the bunch, giving them a 4/10, are worried about inflation and supply chain issues, as well as a lack of available talent.
One CEO in real estate says, “There is poor productivity due to remote work and hybrid work. All companies have had to expand hiring needs with limited real revenue growth and inefficiencies,” to explain why he rates future conditions as a 3/10.
The rating of CEOs in professional services dropped by 14 percent month over month, due to continued inflation and dampening demand because of higher prices. CEOs in industrial manufacturing also suffered a blow to their optimism, with their rating falling by 7.5 percent since April. They have been navigating rising energy prices, the race for talent and global supply chain disruptions.
“The demand for our product is very strong but the supply chain problems and labor shortage issues are hurting our overall business. Inflation will reduce consumer purchases, so I expect that to hurt our business moving forward into the next 6-12 months,” says the CEO of a food equipment manufacturing company. He rates future conditions as a 4/10, down from the 5/10 he rates current conditions.
When examining CEO optimism by size, it’s clear that the smallest and largest companies are growing the most concerned over the state of business in the future. CEOs’ ratings in companies with less than $10 million in revenues dropped by 8 percent this month and those in companies with over $1 billion in revenues dropped by 9 percent.
Small company CEOs are saying that slight decrease in demand is driven by uncertainties in the future of the economy.
As for large companies, the CEO of a billion-dollar manufacturing firm puts the reasons why he expects deterioration plainly, saying, “The big three: Inflation, interest, disruptions.”