North American CFOs feeling good, but not about hiring

CFO optimism is on the rise overall, but finance chiefs remain skeptical about hiring, according to a quarterly Deloitte survey. Meanwhile, expectations for earnings and sales growth are moderating.

Nearly 60% of North American CFOs expressed rising economic optimism in the second-quarter CFO Signals survey, compared with 13% expressing a rise in pessimism. That optimism-pessimism gap is the largest in the survey’s three-year history.

The Deloitte survey came from the responses of 105 CFOs, mainly at large, public companies in the United States, plus some in Canada and Mexico. The results echoed those of the broader AICPA Business & Industry Economic Outlook Survey, which in early June showed optimists about the U.S. economy outnumbering pessimists nearly three to one.

In those two surveys, and another by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business, hiring plans are muted.

In the FEI survey, which measures responses from finance chiefs in the United States, Mexico, Italy, and France, hiring expectations declined compared with the previous quarter, and not just in Europe. More than half of U.S. CFOs (54%) in the FEI CFO Global Outlook Survey said they planned to hire, down from 63% who planned to hire in the previous quarter. The FEI survey, released in May, showed a slight decline in overall optimism, including a small drop in sentiment by U.S. CFOs about their own businesses.

In the Deloitte survey, CFOs’ top three impediments to growth are government spending and budget policy, including health care reform; industry-specific regulation; and environmental regulation.

The survey, meanwhile, showed that U.S. finance chiefs expect to add just 1.3% to their workforce in the next 12 months. More than one in five CFOs expect to cut jobs. Still, the overall expected domestic employment growth in North America is 2.4%, the highest in the Deloitte survey since the second quarter of 2010.

CFOs expected earnings to increase by 10.3%, according to the second-quarter survey. That’s down from 10.5% during the same quarter in 2012. Respondents also expected sales to grow 5.7%. That’s down from 6.6% registered during the second quarter of 2012.

“It is hard not to wonder if future sales, earnings, hiring, and investment will catch up with the optimism, or if the optimism will fall back in line with CFOs’ still-muted growth expectations,” the report said.

—Neil Amato (namato@aicpa.org) is a JofA senior editor.