Survey: CFOs remain optimistic about their firms' performances this year

North America’s top financial officers remain optimistic about their companies’ prospects this year, although U.S. CFOs are less confident than their Canadian and Mexican counterparts.

Meanwhile, weaker perceptions of major economies, substantial pessimism in the manufacturing sector and a decline in expectations among U.S. CFOs suggest negative undercurrents, according to the to Deloitte’s second quarter survey released Monday.

"Net optimism is holding steady, but lower earnings and capital spending growth expectations suggest U.S. CFOs are factoring in bumps that were not on their radar screens three months ago,” said Sanford Cockrell III, national managing partner with Deloitte.

“Nevertheless, there does seem to be some stabilization around CFOs’ sentiment and expectations.”

Meanwhile, manufacturing CFOs posted the lowest projections of any sector for earnings and capital spending growth, while declining optimism doubled to 38 percent.

Overall, optimism is stabilizing after three years of volatility — 44.3 percent of CFOs expressed improving optimism this quarter, compared with 18.6 percent, saying it was declining, little changed since the first quarter, according to the survey, which tracks the thinking and actions of more than 100 CFOs from very large North American companies.

Since the final three months of last year, optimism has moved by less than 8 percentage points, the lowest period of volatility since the survey began in 2010.

Views about global economies, such as China and Europe fell, too.

Sentiment regarding the Chinese economy one year from now fell for the third consecutive quarter, though it remains positive overall.

Confidence in Europe’s trajectory also fell, but the long-term trend of growing confidence about the continent remains.

The financial officers were slightly less confident about the economy today and in one year’s time, though optimism remains relatively strong and at similar levels to recent quarters.

Meanwhile, U.S. CFOs lowered earnings expectations to 8.1 percent — down from 9.3 percent last quarter and 10.3 percent year-over-year.

Sales expectations rose from the first quarter but, at 5.4 percent, remain down year-on-year.

Talent costs were one of several issues noted by manufacturing CFOs, with 36 percent saying the issue is a notable impediment to growth this quarter, double the level of a year ago.

Talent availability was cited by 26 percent as an impediment, also higher than a year ago.

"Sentiment and expectations over the last year have been less volatile," said Greg Dickinson, director, Deloitte.

“Weaker sentiment this quarter among U.S. and manufacturing CFOs suggests we may be waiting a while longer to see it.”

The survey was conducted between May 9-23 with 81 percent of the 113 respondents were from organizations with more than $1 billion in annual revenues, and 71 percent were from publicly traded organizations.