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Report: CEO Confidence Declines

Chief Executives’ Confidence Measure drops from 57 in first to 50 in second quarter 2006

According to the Conference board’s latest survey of CEOs, the Chief Executives’ Confidence Measure went from 57 in the first quarter to 50 in the second of 2006.

The survey includes 100 business leaders in a variety of industries, and rating above 50 indicates having more positive than negative responses.

“CEOs’ confidence has waned in the second quarter and expectations signal slower economic growth in the coming months,” says Lynn Franco, Director of The Conference Board Consumer Research Center.  “However, the majority of CEOs do not foresee slower growth having an adverse impact on corporate profits.”

The survey showed twenty-seven percent of CEOs claim current economic conditions are better, down from 49 percent in the first quarter, and when assessing their own industries, 40 percent say conditions are better, down from 52 percent.

For the short-term outlook, 21 percent of business leaders expect economic conditions to improve in the coming months, down from 35 percent.  Thirty-one percent expect improvement in their own industries, versus 35 percent in the first quarter.

For profit for the next 12 months, 75 percent anticipate increases.  Across business categories, those in the non-durable goods industry are the most optimistic at 80 percent, followed by durable goods with 79 percent, and 66 percent in the service industry.

Among CEOs who expect profits to increase, 52 percent cite an increase in market/demand growth as the main source of improvement, 26 percent cite cost reductions, 16 percent cite price increases, and 6 percent believe technology will drive profits up.

The Conference Board is one of the world’s leading business membership and research organizations, producing The Consumer Confidence Index and Leading Economic Indicators for the U.S. and other major nations, as well as a wide range of authoritative reports.