U.S. companies expect to make more money, and spend more of it, in the year ahead—and that could translate into more jobs. At the same time, finance executives’ outlook of the overall economy has cooled.
Those are the key takeaways from the third-quarter AICPA Business & Industry Economic Outlook Survey.
The quarterly survey, available at tinyurl.com/93a9s7n, takes the temperature of more than 1,200 finance professionals across industries, gauging their outlook in nine key areas: U.S. economic optimism, organization optimism, expansion plans, revenue, profits, employment, IT spending, training and development, and other capital spending.
Those nine indicators make up the CPA Outlook Index (CPAOI), which matched a post-recession high of 69 in the most recent survey. That’s even with last quarter, when optimism about the U.S. economic outlook and the fortunes of respondents’ own companies surged. A score above 50 indicates a positive outlook.
Companies plan to ramp up hiring, according to the survey. About one-third of companies (34%) said they have too few employees. Also, 15% plan to hire, up from 9% a year ago. That’s a post-recession high for the survey. Small businesses in particular are more inclined to hire; 20% said in the most recent quarter that they are reluctant to hire, compared with 25% who were reluctant to add staff in the previous quarter.
Overall, companies plan to grow their staffing 1.3% in the next 12 months, compared with 0.8% a year ago.
The most recent CPAOI was propped up by improved attitudes about revenue—and how that money might be spent. The outlook for revenue hit its highest point since the first quarter of 2012. Meanwhile, optimism surrounding expansion plans and other capital spending—and profits—climbed to their highest levels in the past year. The outlook for IT spending also remained strong.
The outlook in those categories was tempered by optimism about the overall U.S. economy, which dipped from 66 to 62—the biggest quarter-to-quarter drop of any of the nine indicators. Organization optimism also dipped by a point compared with the previous quarter, as did the outlook for training and development expenditures. Those declines, driven in part by concerns about health care reform and political gridlock, kept the index from eclipsing 70 points—a mark last achieved in 2007.
The short-term story obscures the tale of an otherwise upbeat year. On a year-over-year basis, sentiment improved in all nine sectors of the index, including a 21-point increase in U.S. economic optimism and a seven-point gain in company optimism.