Deloitte “CFO Signals” Report 3Q 2013 – Notable Aspects

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 3rd Quarter of 2013.

As seen in page 2 of the report, “One hundred and twenty-four CFOs responded during the two-week period ending August 23. Seventy-three percent of the respondents are from public companies, and 77% are from companies with more than $1B in annual revenue.”

Here are some of the excerpts that I found notable:

from page 3 :

How do CFOs regard the current and future health of some of the world’s major economies?

CFOs are still feeling reasonably good about North America, but expectations for Europe are low, and expectations for China have fallen.  Nearly 38% rate North America’s economies as more good than bad (up from 30%), and more than half expect the economy to be stronger in a year. By comparison, only 26% regard China’s economy as good, and just 27% expect it to be better in a year; the numbers are 3% and 14% respectively for Europe.

What is the business focus for companies over the next year?

Companies still appear very focused on growth, but more appear to be reassessing their strategies. The vast majority of CFOs say their companies are focused on pursuing opportunity over limiting risk, and much more on growing and scaling than on contracting and rationalizing. Notable this quarter is an increasing bias toward planning over execution and toward direct-cost-reduction over indirectcost-reduction.


How do companies expect performance, spending, and hiring to change over the next 12 months?

Growth and profitability expectations fell substantially this quarter, with sales growth expectations falling to just 5.0%* (well below the 7% long-term average) and earnings growth hitting a new low at just 8.0%* (well below the 12.3% historical average). Capital spending growth expectations fell sharply to just 4.9%*, and domestic hiring growth expectations declined to 1.3%*.

How does CFOs’ optimism regarding their companies’ prospects compare to last quarter?

CFO optimism has been high throughout 2013 and remains high this quarter – bucking a trend that typically sees a steep drop in the second and/or third quarters each year. Forty-two percent of CFOs express improved optimism about their companies’ prospects, and 24% express declining optimism.

from page 5 :

What’s next?

CFOs worsening expectations for key measures, such as sales, earnings, capital investment, and hiring are certainly a cause for concern. Add to this marked uncertainty around governments’ future responses to slow economic growth and geopolitical events, and it is difficult to see the pace of recovery quickening anytime soon.

from page 14:

Domestic hiring is expected to rise 1.3%—well below last quarter’s peak, but still above most recent quarters. The median is again 0%, but this quarter’s variability of responses is much lower than last quarter’s. Forty-seven percent of CFOs expect year-over-year gains (comparatively high), and 22% expect cuts (comparatively low).


I post various business and economic surveys because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these surveys.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1688.07 as this post is written