Executive Confidence Gains Traction in the Q3 Results

Executive confidence appears to be on a positive trajectory in the third quarter, according to the latest CFO Business Sentiment Index, a quarterly survey of CFOs produced by CFO Intelligence.

After two months of flatlining over the national economy’s direction — with only about half of executives seeing growth over the prospects of growth — 70% of CFOs were optimistic at the end of the third quarter. No one sees an economic pullback, and only 20% see no change, with 10% expressing uncertainty. The optimism carried through to their?own verticals, as a robust 90% see growth in their industry, with 10% forecasting no change.?

Early in the quarter, 23% of CFOs cited global geopolitical issues as?a top challenge to the U.S. economy, but that shifts as we get closer?to the November elections. By September, domestic politics (26%) emerged as the front-runner threat, with global concerns falling to ?a distant second place, a 16% share, tied with inflation. Taxes and?government regulation were each cited by about 11% of respondents. China (5%), supply chain (5%), employee availability (5%), and?healthcare costs (5%) rounded out the list.

Real estate demand appears to be softening this quarter, with acquisition expectations falling from 9% of executives in July to zero in September. Similarly, while 25% of executives said they planned to dispose of real estate in July and August, the end of the quarter saw 50% planning to shed space. Another 50% said they’ll rebalance their portfolio.

Inventory appetite stayed fairly steady during the quarter, with about 22% planning increases and an equal share seeing a pullback in on-hand stock. About 56% plan no changes to inventory levels.?

M&A forecasts started out strong, with about 40% of CFOs seeing combinations in their company’s future, but that dwindled to about 29% in September. The pullback may have been sparked by rising fears of a possible recession.

Those concerns may also be influencing hiring plans, which also started out strong — 53% of CFOs planned to expand their workforce at the beginning of the quarter — but that fell to a 22% share by September. And CFOs continue to embrace artificial intelligence, with nearly 90% through the quarter rating it “important” or “moderately important.”

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