Cap Ex to Rise, Hiring Plans Remain Unchanged Say Fed Should Hold Steady on
Rates
FLORHAM PARK, N.J., and NEW YORK, June 22 /PRNewswire/ -- Prices of
products will increase an average of 3.3% over the next twelve months,
according to CFO forecasts in this quarter's "CFO Outlook Survey,"
conducted by Financial Executives International (FEI) and Baruch College's
Zicklin School of Business.
Three-quarters (76%) of the 207 surveyed CFOs expect their companies to
raise prices, a slight increase over the 71% projecting price increases in
the first quarter's survey. However, last quarter, the average forecast was
an increase of 1.5%, about half the average increase projected this quarter
for the next twelve months.
Capital spending appears to be on the rise, too, with almost three-
quarters (73%) of the surveyed CFOs expecting an increase at their company
over the next twelve months. The average forecast is an increase of 8.1%,
up from last quarter's projected 6.6%. Hiring is expected to grow by 4.0%,
the same forecast as last quarter.
While three-quarters of the CFOs say they are concerned about
inflation, two-thirds (69%) of the surveyed group think the Federal Reserve
should hold steady on interest rates. A quarter (26%) are in favor of a
one-quarter percentage point increase.
The CFOs' optimism about economic and company-specific growth dipped
this quarter, though, with economic optimism falling back to 68.64 out of
100 from 71.06 and company-specific optimism falling to 76.27 from 78.12.
"Our survey results don't point to stagflation, a concern today among
investors and economists," noted John Elliott, Dean of Baruch College's
Zicklin School of Business. "Instead, CFOs are forecasting measured growth
in capital spending and price increases. Yet, they don't favor further
increases in interest rates at this time."
Dean Elliott reported that smaller companies appear to be the stronger
drivers of economic growth. "Smaller companies expect to grow more rapidly,
invest more aggressively and have more control over their product prices,"
he said.
Enron Verdicts Win Support
Survey respondents showed nearly full agreement with this quarter's
Enron verdicts, with only 3% disagreeing with the guilty rulings against
Kenneth Lay and 2% disagreeing with them against Jeffrey Skilling. While
few argued for maximum sentencing, the median sentenced proposed by the
CFOs for Lay was 20 years and Skilling, 25 years.
Colleen Cunningham, President and CEO of FEI, noted that respondents'
comments expressed the belief that ignorance is no defense for a CEO or a
CFO. She added that "CFOs are committed to demonstrating that Enron was the
exception, not the rule."
Lasting Legacy of Sarbanes-Oxley
This quarter's survey followed up on the impact of more extensive
reporting requirements under Sarbanes-Oxley. Among the respondents from
public companies, 89% said their auditors were spending more time and care
on their reviews. Corporate finance divisions at public companies have also
grown significantly since the 2002 Act. Staffs have increased at more than
two-thirds of the public companies surveyed (68%), compared to 15% at
private companies.
About the Survey
Full survey results will be available June 26 at http://www.cfosurveys.com.
For the full results prior to that, please contact
andrewhealy@towerspr.com.
This quarter, the CFO Outlook Survey, conducted by Financial Executives
International and Baruch College's Zicklin School of Business, interviewed
207 corporate CFOs electronically the week of June 5. CFOs from both public
and private companies and from a broad range of industries, revenues and
geographic areas, including some off-shore companies, are represented.
Survey respondents are members of Financial Executives International.
Revenue-weighted averages are provided for projected changes in capital
spending and for projected price increases. An employee-weighted average is
provided for the projected change in hiring.
FEI has been conducting surveys gauging the country's economic outlook
from the perspective of CFOs for the past nine years.
About FEI
Financial Executives International (FEI) is the leading advocate for
the views of corporate financial management. Its 15,000 members hold
policy- making positions as chief financial officers, treasurers, and
controllers. FEI enhances member professional development through peer
networking, career planning services, conferences, publications, and
special reports and research. Members participate in the activities of 86
chapters, 75 of which are in the United States and 11 in Canada. For more
information about FEI, visit http://www.fei.org.
About Baruch
Baruch College, founded in 1847, is a senior college of the City
University of New York. The Zicklin School of Business at Baruch College is
the largest collegiate school of business in the nation, producing
graduates who assume leadership positions in all areas of American business
as well as conduct important academic research. Baruch has one of the
largest accounting programs in the country whose graduates become
practicing CPAs. http://www.baruch.cuny.edu
SOURCE Financial Executives International; Baruch College
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Related links:
http://www.baruch.cuny.edu
http://www.fei.org http://www.cfosurveys.com
http://www.prnewswire.com/comp/310650.html /
CONTACT:
Andrew Healy, TowersGroup, +1-212-354-5020,
andrewhealy@towerspr.com; Chris Allen, FEI, +1-973-765-1058,
callen@fei.org; John Elliott, Baruch College, +1-646-312-3030,
john_elliott@baruch.cuny.edu
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