The Conference Board Measure of CEO Confidence fell moderately this quarter as supply chain issues and labor shortages continue to dampen sentiment and outlook. The measure is now at a level of 65, down from 67 in the third quarter and from the second quarter’s all-time high of 82.
A reading above 50 points reflects more positive than negative responses. The survey was fielded from Nov. 3 through Nov. 19, before recent news of the omicron Covid-19 variant.
“CEO confidence slipped further in Q4, as business leaders continued to wrestle with the economic aftermath — and ongoing social impacts and scientific uncertainties — of the pandemic,” said Dana Peterson, chief economist of The Conference Board. “Hiring and retention remain defining challenges entering the new year, as CEOs’ concerns over labor shortages and wage growth rose further from the heights already recorded in Q3.”
A survey for the CEO confidence measure found that 61% of CEOs said business conditions are better compared to six months ago, down from 70% who said the same thing in the third quarter.
CEOs also saw the job market continue to tighten in this quarter as labor shortages grew more pronounced. And even as the pace of hiring is likely to accelerate over the next 12 months, filling these open positions may be a struggle. This quarter’s survey found that 69% plan to expand their workforce, up from 60% in the third quarter. However, more CEOs also report difficulty finding qualified workers; 79% reported difficulty finding qualified workers in the fourth quarter compared to 74% in the third quarter.
As a result, the outlook for wages rose sharply, with 79% of CEOs in the fourth-quarter survey expecting to increase wages by 3% or more over the next year, up from 66% in the prior survey.
“Facing snarled supply chains and inflation, severe labor shortages in many areas, and new viral variants, CEOs are significantly less sanguine than they were earlier this year, when the pandemic seemed all but over,” said Roger Ferguson Jr., vice chairman of The Business Council and Trustee of The Conference Board. “Nevertheless, a strong majority remain optimistic about the prospects for growth, both within their own industry and for the economy as a whole.”