Americans attempting to climb their way out of the recession have done so in fits and starts. It seems that for every positive report about the U.S. economy, there is a negative one just around the corner.
U.S. consumer confidence rebounded in April and hit a three-month high in May, while rising gas prices, unemployment rates and a slowdown in the retail economy threaten to kill any of that confidence.
But according to the latest GE Capital Survey, released Tuesday, there’s plenty of reason to be more optimistic than less.
Chief financial officers of mid-sized companies are becoming more positive on the state of the industries in which they operate, their collective level of optimism up markedly since they were first surveyed in January 2010.
And it’s not because they’ve been drinking Consumer Kool-Aid.
According to the survey, conducted during the first quarter with 530 CFOs from mid-sized U.S. companies (revenues between $50 million and $1 billion), revenues will increase in 2011 compared to 2010, with 72 percent saying they expect higher revenues year-over-year. This is up from 64 percent of CFOs who expected a year-over-year bump in 2010.
An even better sign for Americans struggling with unemployment, 80 percent of the CFOs surveyed by GE said they expect to hire additional employees in the next 12 months — 65 percent having already begun hiring. Those planning to hire expect to increase their workforces by six percent this year, and 80 percent of those positions are expected to be permanent.
“Eighty percent planning on hiring was a pretty bold statement,” Dan Henson, CEO of GE Capital Americas, told Bloomberg on Tuesday. “This was the most definitive we’ve seen in the three times we’ve done this survey.”
More than half (56 percent) of CFOs surveyed expect to grow their cost structures in 2011 — about the same amount as 2010 and another positive sign for an economy that continues to dig out.
The one area CFOs continue to be worried about is the cost of raw materials – and their effect on profit margins. Rising raw materials costs were listed as a significant concern by 75 percent of the CFOs — up from 60 percent a year ago.
Nonetheless, a large majority (82 percent) of those surveyed expect their profit margins to increase or stay the same in 2011, which is down slightly from January 2010 survey, when 86 percent anticipated stable or wider profit margins.