The nation's top corporate beancounters remain mostly gloomy about the economy, which translates into weak employment growth during the next year.
That's the takeaway from the latest quarterly Duke University/CFO Magazine Business Outlook Survey released this morning. The survey, which concluded Sept. 10, asked 937 chief financial officers from public and private companies about their expectations for the economy.
CFOs, who oversee businesses' books and help set fiscal strategy, are considered good barometers of future economic activity.
CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, down from 58 in the previous quarter. It was the lowest level since the first quarter of 2009, when optimism fell to 40.
"This dramatic drop in optimism bodes poorly for the economic outlook," said Julia Homer, executive vice president for content at CFO Publishing, in a prepared statement. "Half of CFOs say there is only a six-month window -- and another one-fourth believe it's a 12-month window -- during which they can maintain current levels of business activity without improvement in the overall economy."
Top concerns for CFOs include the federal government's agenda and weak consumer demand.
For the second quarter in a row, maintaining employee morale is also among the top company concerns. Health costs also have reappeared among the top worries, as CFOs expect corporate health-care payments to rise 10 percent in the next year.
Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.
U.S. companies expect full-time domestic employment to inch up by 0.7 percent over the next year, while temporary employment will increase 0.8 percent.
"This rate of U.S. employment growth will increase payrolls, but not put a dent in the unemployment rate due to growth in labor force participation," Homer said.
Credit is still tight for many firms. Compared to a year ago, 30 percent of CFOs say borrowing has become more difficult, compared to 25 percent who say borrowing is easier.
"There has been no progress in fixing the credit problem over the last year," said Campbell R. Harvey, a professor of finance at Duke's Fuqua School of Business and founding director of the survey. "Indeed, half of the small businesses say credit conditions are worse than in 2009."
Read the full CFO survey here.
