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U.S. Business Leaders’ Optimism Hits Highest Level Since 2005

July 17, 2013, 07:29 AM
Filed Under: Economic Commentary

Optimism for the nation’s economic outlook among U.S. business leaders rose to a net balance of 55 percent in second quarter 2013 from 31 percent in the previous quarter. This is the highest level recorded since 2005, according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,200 business leaders in 44 countries.

While U.S. businesses are feeling more confident about growth in their operations and the economy, optimism among business leaders in the world’s second largest economy slumped to the lowest level recorded in IBR history. Business optimism in China fell to a net balance of just 4 percent, down from 25 percent in first quarter 2013.

Business sentiment also dropped in the other BRIC economies, with business leaders’ confidence in those countries sliding from net 48 percent in first quarter 2013 to 23 percent. Eurozone business confidence continues to remain fragile, dropping to net -8 percent in second quarter 2013, from -2 percent in first quarter 2013. However, there was an overall improvement in G7 business confidence, with optimism in the United Kingdom climbing from net -1 percent in first quarter 2013 to 34 percent in second quarter 2013. Sentiment in Japan turned positive for the first time in IBR history, rising to net 8 percent from -2 percent.

“As many economic indicators continue to point toward a rebounding economy and company earnings remain positive, U.S. executives are beginning to feel more certain about their business decisions, including investments that pave a path to growth,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “The outlook of the world’s largest economy is unlikely to reverberate in other markets until there are some consistent signs of stability in Europe and the BRIC economies adjust to their slowing pace of growth.”

The improving U.S. sentiment also extends to U.S. business growth expectations. Net 59 percent of businesses expect to see revenues climb during the next 12 months, up from 46 percent in first quarter 2013. A net balance of 48 percent of business leaders expect profits to grow, up from 42 percent for the previous three months. Hiring expectations in the United States also remain above the global average with a net balance of 33 percent of business leaders foreseeing an increase in hiring during the coming year.

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