Deloitte “CFO Signals” Report 2Q 2011 – Notable Aspects

Recently Deloitte released their “CFO Signals” report (pdf) for 2nd Quarter 2011.

As seen in page 2 of the report, “Seventy-eight CFOs responded during the two weeks ended May 27. Three fourths are from public companies, and three-fourths are from companies with more than $1B in annual revenue.”

Here are some excerpts that I found notable:

from page 5:

But something appears to have shifted substantially this quarter with respect to CFOs’ optimism. Despite continuing positive financial expectations, CFOs’ own-company optimism dropped markedly this quarter. The difference between the percentage of CFOs who are more optimistic and those who are less optimistic (or “net optimism”) was 47 percentage points last quarter, and it dropped to just 8 this quarter. Moreover, where past pessimism has been driven largely by deteriorating assessments of the macro-business environment, roughly half of the rising pessimism this quarter is driven by internal concerns.

from page 15, concerning “own-company optimism” :

This quarter, optimism rose at its slowest pace in the past five quarters. Moreover, the spread between those indicating rising optimism and those indicating falling optimism (“net optimism”) fell to just 7.7%—considerably lower than the spreads we have seen in the past year.

from page 17, concerning Industry “top challenges” :

As several domestic markets stagnate, many companies face challenges in their attempts to grow. This quarter nearly 30% of CFOs say market growth is a top challenge, and another 25% cite pressures from market contraction.

Uncertain demand is leading to other repercussions, including rising competition and pricing pressures. Pricing trends are a top concern for 53% of companies and for five of the eight industries (except Energy/Resources, Healthcare/Pharma, and T/M/E). Rising input prices may be exacerbating pricing challenges with nearly one quarter of CFOs naming this a top three challenge, but industry overcapacity and excess inventories do not appear to be major contributors (except within Services, where overcapacity appears to be a growing challenge).


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1326.82 as this post is written