Top financial execs upbeat on US economic growth, hiring

Top financial executives gave the nation's economic health the highest rating since the financial crisis in 2008 with expectations for profits and hiring on the rise. 

Chief financial officers on Tuesday gave the nation’s economy a 61 — with 100 reflecting extremely strong growth — up from 59 for 2015, the highest level in eight years, according to the Bank of America Merrill Lynch 2016 CFO Outlook.

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Overall, 90 percent of financial officers think that the U.S. economy will expand (49 percent) or remain the same (41 percent) next year. 

“CFOs continue to be optimistic about the U.S. economy and their own companies,” said Alastair Borthwick, head of global commercial banking at Bank of America Merrill Lynch.

"It‘s significant that more than half the companies surveyed are investing their resources to hire new full-time employees, for the first time since the recession, as a means to support their anticipated growth," Borthwick said. 

One of the brightest spots in the report is the willingness of firms to ramp up hiring next year. 

More than half (54 percent) of CFOs say they plan to hire additional full-time employees in 2016, up from 52 percent, which is the highest reported since 2008.

Some economists say they expect the labor market to return to full employment by the middle of next year.

Financial leaders say the 2016 elections will have the largest effect on the economy next year. 

While a majority — 85 percent expect that profits will either remain the same or rise next year — they are concerned about the effects of several issues: healthcare costs (39 percent), weak domestic demand (37 percent), increased competition (31 percent), shortage of skilled talent (31 percent) and regulatory issues (28 percent).

Most CFOs forecast growth for their companies in 2016: 50 percent expect 1 to 5 percent growth; 28 percent predicts 6 to 10 percent; and 11 percent anticipate growth of 11 percent or more.

A majority — 89 percent — expect sales growth next year, up from 87 percent in 2015.

But while they are feeling more positive about the trajectory of the U.S. economy, the CFOs remain cautious about the global situation with the average rating falling to 49 from the 51 this year, reflecting economic and political instability abroad.

Meanwhile, expansion plans remained consistent for the third consecutive year.

Among those companies implementing growth strategies in 2016, 65 percent report that growth will occur only in the United States, while 32 percent expect a mix of domestic and international growth.

Next year, 61 percent of companies surveyed expect to be involved in foreign markets — with 48 percent buying from abroad, 41 percent selling more to foreign markets and 21 percent having operations outside the United States.  

The top three regions for international operations are Asia (62 percent), Europe (61 percent) and Latin America (50 percent).

Nearly all CFOs (96 percent) say they set aside money for new technology with the majority saying those funds will go to data security initiatives.

The survey of 500 financial executives from companies with annual revenues ranging from $25 million to $2 billion, a majority of CFOs report the outlook for the economy and their companies as increasingly positive.