Deloitte “CFO Signals” Report 4Q 2013 – Notable Aspects

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 4th Quarter of 2013.

As seen in page 2 of the report, “Ninety-six CFOs responded during the two-week period ending November 22. Sixty-eight percent of the respondents are from public companies, and 79% 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 you regard the current and future status of the North American,
Chinese, and European economies?

Perceptions of North America softened with 26% describing conditions as good (down from 38% last quarter) and 55% believing conditions will be better a year from now (same as last quarter). By comparison, 32% regard China’s economy as good (25% last quarter), and 38%
expect it to be better in a year (25% last quarter); the numbers are 4% and 23% for Europe, respectively.

What is your company’s business focus for the next year?

Companies still appear mostly focused on growth, but there are signs of rising conservatism and defensiveness. CFOs still indicate a bias toward pursuing opportunity over limiting risk, but an increasing proportion are now focused on contracting and rationalizing. After three quarters of a strong revenue bias, there is now a roughly equal focus on revenue growth and cost reduction.


Compared to the past 12 months, how do you expect your key operating
metrics to change over the next 12 months?*

Sales growth expectations declined to 4.1%, their lowest in the history of this survey. Earnings are expected to rise 8.6%, up from last quarter’s survey low of 8.0%, but still comparatively low. Capital spending expectations rose to 6.4% from 4.9% this quarter, but they are still well below the survey average. Domestic hiring is expected to rise 1.4%, about even with last quarter’s estimate.

How does your optimism regarding your company’s prospects compare to
last quarter?

For the first time, CFOs have remained upbeat for the entire calendar year. Fifty-four percent of CFOs express rising optimism (up from 42% last quarter), and just 21% express declining optimism (down from 24% last quarter).

from page 14:

Domestic hiring is expected to rise 1.4%, about even with last quarter’s1.3% and above most recent quarters. The median is again 0.0%, and variability of responses is comparatively low this quarter. Forty-eight percent of CFOs expect year-over-year gains (comparatively
high), and 20% expect cuts (comparatively low).

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” and “Economy Optimism” found on page 6.


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 1831.98 as this post is written