Source: Jin10 Data
57% of the surveyed CFOs expect that the price growth of their company's products will exceed pre-epidemic levels.
According to a survey that ended on June 3rd, the monetary policy of the US Federal Reserve, US inflation, and labor market prospects are still the top concerns of Chief Financial Officers (CFOs) in the next 12 months. 28% of surveyed CFOs said they are delaying, reducing, or canceling investments due to uncertainty brought by the US election.
The figure (28%) is lower than June 2016, when data from Duke University's Fuqua School of Business showed that about half of CFOs planned to reduce investment or hiring due to political uncertainty.
Duke University's Fuqua School of Business, along with the Federal Reserve Banks of Richmond and Atlanta, conducts a quarterly survey of CFOs, asking about their spending plans, economic outlook, key concerns, and other topics such as technology and its impact on businesses. The effect of political uncertainty was not asked during the 2020 presidential election, according to the Fuqua School of Business.
The CFOs' optimism is the same as in the first quarter of this year but higher than the same period last year, according to the survey. 447 respondents said they expect GDP to grow by 1.8% year-on-year in the next 12 months, slightly lower than for the past few quarters.
Executives are more optimistic about their business prospects than the overall economy. John Graham, finance professor at Duke University and academic director of the survey, said, "In a world of declining consumer confidence, CFOs' optimism has not diminished. They're not super optimistic, but they're not super pessimistic either. Their projections have never approached recession, and they continue to hold the same views."
However, CFOs expect cost pressures to continue, with 57% of respondents expecting product prices at their companies to increase faster than pre-pandemic levels.
Daniel Weitz, survey director at the Atlanta Federal Reserve, said in a statement, "Although the growth of unit costs, wages, and prices has slowed from its peak in 2021 and 2022, the surveyed CFOs' price expectations have not returned to pre-pandemic levels, suggesting pricing pressures may be more persistent than originally thought."
CFOs also said they plan to automate tasks currently performed by employees, with most expecting artificial intelligence to play a key role. Respondents said automation improves product quality and yield while reducing labor costs.
Graham said,"CFOs indicate that their companies are using artificial intelligence to automate a range of tasks, from paying suppliers, invoicing, procurement, financial reporting to optimizing equipment utilization."
Editor/Lambor