Deloitte “CFO Signals” Report 3Q 2012 – Notable Aspects

Recently Deloitte released their “CFO Signals” “high-level” report for the 3rd Quarter of 2012.

As seen in page 2 of the report, “Eighty-five CFOs responded during the two weeks ended August 24. More than 75% are from public companies, and 80% are from companies with more than $1B in annual revenue.”

Here are some excerpts that I found notable:

from page 4 :

CFOs’ expectations for sales and earnings growth both dropped precipitously this quarter, and their expectations for capital investment and hiring followed suit.

also:

This quarter’s survey results show that global economic developments have taken a large toll on CFOs’ expectations for their home economies. In the U.S., more than 80% of CFOs believe their economy is either stalling or about to stall, and the proportion is about 65% for both Canada and Mexico.  This pessimism is driving the strongest economic concerns we have seen in this survey. Nearly 60% of CFOs mention U.S. or global economic conditions as their most worrisome risk, and one third of those CFOs specifically mention European conditions.

also:

But this quarter’s CFO expectations appear to confirm the case for worry – especially in the U.S. Sales growth expectations of 4.8%* are a new survey low –well below the previous low of 5.9%* in the first quarter of this year. U.S. expectations are just 4.3%* (6.7%* last quarter), with Canada and Mexico both at about 6.5%* (they were 5.9% and 8.7% last quarter, respectively).  Earnings growth expectations also declined, with this quarter’s 8.0%* a new survey low – well below last quarter’s 10.5%*. The median expectation fell from 8.5%* to just 6.0%* (another survey low). U.S. estimates are lowest at 7.2%* (12.3%* last quarter), with Canada at 8.1%* (4.6%* last quarter) and Mexico at 8.9% (11.7%* last quarter).

from page 5, regarding “Investment and hiring estimates tumble” :

Capital investment growth expectations, for example, fell precipitously from 11.4% to just 4.7% this quarter – well below the previous low of 8%. Just over half of CFOs expect gains at all, and the median expectation is now just 3% (also survey lows).  Hiring also took a major hit, with domestic hiring expectations falling to another survey low at just 0.6%.

from page 11, regarding “Economy” :

Just over half of U.S. CFOs believe the economy is still growing, but nearly three quarters of those CFOs believe it is beginning to stall. Moreover, about 45% believe the economy is already stalling, and just under one third of those CFOs believe a contraction is next. Together, this means that more than 80% of U.S. CFOs expect their economy to stall or contract.

from page 15, regarding “Industry – Top Challenges” :

Pricing trends maintained the top spot this quarter, continuing its threequarter rise to 50%. They are a top-two concern in all sectors except Financial Services.

also:

Market contraction concerns rose to 36% (driven mostly by high importance in Manufacturing and Technology), and overcapacity and excess inventoryconcerns held steady at 23% (with high importance in Manufacturing). Market growth challenges held steady at 23% and are a top-two challenge for Financial Services.

from page 16, regarding “Company – Top Challenges” :

Revenue from existing markets again tops this quarter’s list with 58% of all CFOs naming it a top challenge – roughly the same percentage as last quarter. It is again the top company challenge for all industries – a phenomenon that occurred for the first time last quarter. Revenue from new markets held steady at a survey-low 21%, consistent with a possible scaling back of geographic expansion in response to conditions in Europe and Asia.

_____

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 1433.32 as this post is written