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Deloitte CFO Signals Survey for Q2 2017

Deloitte’s quarterly CFO Signals survey for the second quarter of 2017, reveals chief financial officers representing many of North America’s largest and most influential companies, including ones from the San Francisco Bay Area and Silicon Valley, continue to be optimistic about the current and future states of the current economy, as well as within their own-company prospects.

Even with growing concerns about political and policy uncertainty, 63 percent of the surveyed CFOs’ business focus will be on offense over defense for the next year. This percentage hit a new survey high.

The same number, 63 percent of surveyed CFOs also say they are biased toward revenue growth, one of the highest levels in the survey’s history, and only 18 percent claim a bias toward cost reduction, for a survey-high net value of plus 45 percent. The bias toward investing cash over returning it to shareholders (62 percent versus 16 percent) hit another three-year high at a net plus 46 percent.

With regard to major regional economies, surveyed CFOs’ assessments of the North American economy remain positive, with 65 percent saying current conditions are good and 58 percent expecting better conditions in a year.

Current and future perceptions of Europe both hit four-year highs, with 17 percent of CFOs saying they are good and 30 percent expecting them to be better in a year.

Finally, perceptions of China’s economy improved significantly, with 28 percent of CFOs saying current conditions are good and 32 percent expecting better conditions in a year.

All four business outlook metrics, tracked by this survey for 29 quarters, remain strong. Revenue growth expectations rose from 4.3 percent last quarter to 5.6 percent, above the prior two-year survey average. Earnings growth expectations rose to 8.7 percent from last quarter’s 7.3 percent, a two-year high. Capital investment growth expectations fell to 9 percent this quarter from last quarter’s 10.5 percent, but still sit at their second-highest level in five years. Domestic hiring expectations held steady quarter-over-quarter at 2.1 percent. Net optimism declined from last quarter’s survey-high at plus 50 to plus 44 percentage points—the second-highest level in four years—with nearly 55 percent of CFOs expressing rising optimism and 11 percent citing declining optimism.

Almost seven years ago, CFOs were asked how they stay informed, and this quarter CFOs again answered questions about where they find information on macroeconomics, geopolitics, policy, financial markets, industry trends and management trends.

CFOs have been citing volatility in the business environment as a growing challenge for several years now, and this quarter’s findings seem to show they are spending considerable effort staying abreast of what’s happening—across a very broad range of areas. Some appear to get significant help from internal and external resources who focus on particular areas, but it also appears they are doing a lot of research on their own.

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