Tight job market worries otherwise optimistic CFOs

By Business LeadersFOXBusiness

Americans’ increasing optimism about the economy

Raymond James policy analyst Ed Mills and Moody’s Chief Capital Markets Economist John Lonski the outlook for the U.S. economy.

CFOs are optimistic about the state of the global economy, particularly America’s, and they plan on focusing on revenue growth rather than cost cutting. But geopolitics, plus the difficulty of finding and retaining talent, worry business leaders.

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This is all according to CFO Signals, Deloitte’s quarterly, high-level survey, conducted during the second quarter, about what the CFOs of North America’s largest companies are thinking.

In the latest survey, CFOs’ assessments of the North American, European and Chinese economies’ current performance remained very strong (with North America at a new high), but their expectations for performance declined somewhat — particularly for Europe and China.

The CFOs’ perceptions of North America improved, with 94% rating the current conditions as “good,” up from the first quarter’s 90% and a survey high. Perceptions of Europe declined to 47%, but remained near their survey high and in China perceptions rose to 55%, a new high.

Fifty-two percent expect better conditions in a year in North America, (down from 60%), in Europe, 36% expect better conditions in a year versus 51% in the prior survey. For China, 31% expect better conditions in a year (down from 37%).

On the other hand, business leaders expressed concern about how politics plus finding and retaining talent will affect growth initiatives.

The lack of skilled labor is “very concerning” for large multinationals, Sandy Cockrell, the global leader of the CFO Program for Deloitte Touche Tohmatsu Ltd. told FOX Business in a phone interview.

The need for skilled labor across all industries is absolutely critical, with Cockrell adding, “There will be wage growth for skilled labor.” CFOs anticipate next year they will increase domestic payrolls by 3.2% -- a survey record.

Cockrell added that while recently employers main concern has been attracting new workers, going forward there will be a shifting focus to retaining talent.

The CFOs also voiced concerns about politics, namely trade policy, with Cockrell noting that this survey was completed after the steel and aluminum tariffs were announced but before the back and forth on tariffs heated up.

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When it comes to future strategic initiatives, the surveyed CFOs are biased toward revenue growth over cost reduction; 67% vs. 17%, while they were also biased toward investing cash versus returning it; 56% versus 18%.

While the business leaders remain confident, their appetite for risk is decreasing. Fifty-eight percent of CFOs say now is a good time to be taking greater risk — down from last quarter’s survey high of 69%.