Bank of America Merrill Lynch released its 2016 CFO Outlook, reporting that CFOs rate the U.S. economy is at its highest level since the 2008 recession and predict continued growth for their companies and workforce in 2016.

In a survey of 500 financial executives from companies with annual revenues ranging from $25 million to $2 billion, a majority of CFOs report the outlook for the economy and their companies as increasingly positive. Important findings include:

The U.S. and World Economies

On a 100-point index, with zero being extremely weak and 100 being extremely strong, CFOs give the U.S. economy an average score of 61, up from last year (59) and the highest of the last eight years.

Ninety percent of CFOs believe that the U.S. economy will expand (49 percent) or remain the same (41 percent). The top factors that CFOs feel will impact the U.S. economy in 2016 are the elections (63 percent) and health care costs (50 percent).

If interest rates were to rise, 70 percent of CFOs surveyed say it would have no impact on how they would invest their working capital, maintaining their current allocation of instruments and deposits. This is up significantly from 51 percent in 2015, suggesting that CFOs previously made adjustments in anticipation of rising interest rates.

CFOs remain cautious about the world economy. The average rating is 49, down from the 51 reported for 2015, reflecting the current economic and political instability abroad.

Investing in Employees

More than half (54 percent) of CFOs report they plan to hire additional full-time employees in 2016, up from 52 percent expected last year, which is the highest reported since the financial crisis in 2008. Of the remaining companies, 40 percent have no plans to change the size of their workforce.

On average, CFOs expect their labor costs to increase 5 percent in 2016, down from 7.1 percent last year.

The most common benefits programs that companies use to attract and retain qualified employees include: health care insurance (97 percent), retirement funding (94 percent) and bonuses or other compensation incentives (87 percent). In addition, 65 percent offer wellness programs, 55 percent provide education funding, 49 percent offer flexible work hours, and 29 percent offer financial counseling services.

“CFOs continue to be optimistic about the U.S. economy and their own companies,” said Alastair Borthwick, head of Global Commercial Banking at Bank of America Merrill Lynch. “This is consistent with what we’re hearing from our middle-market clients. It‘s significant that more than half the companies surveyed are investing their resources to hire new full-time employees, for the first time since the recession, as a means to support their anticipated growth.”

Growth Strategies and Tactics

Most CFOs forecast growth for their companies in 2016: 50 percent expect 1 to 5 percent growth; 28 percent predicts 6 to 10 percent growth; and 11 percent anticipate growth of 11 percent or more.

In addition, sales growth projections for 2016 are trending in a positive direction: 89 percent of CFOs expect their company’s sales to grow in 2016, up from 87 percent in 2015 and 85 percent in 2014.

Expansion plans for companies remain consistent for the third consecutive year. Among those companies implementing growth strategies in 2016, 65 percent report that growth will occur in the U.S. only, while 32 percent expect a mix of domestic and international growth. Among companies with foreign market involvement, 47 percent are growing in the U.S. only, and 50 percent are growing both inside and outside the U.S.

Most CFOs (85 percent) report that their 2016 profits will either remain the same (50 percent) or increase (35 percent) in 2016.

Companies will employ a variety of growth strategies to meet their 2016 objectives. The two most reported strategies are market penetration [selling more existing products or services to current customers] (85 percent) and market expansion [finding new customers and/or new markets for existing products or services] (80 percent). Other strategies include the introduction of new products or services (57 percent), balance sheet optimization (26 percent), and mergers and acquisitions (23 percent).

Nearly all companies (98 percent) will implement one or more growth strategies in 2016. Of those companies pursuing 2016 market expansion plans, 85 percent are looking to grow in the U.S., 17 percent want to expand internationally, and 15 percent are planning both domestic and international expansion.

For companies considering a merger or acquisition in 2016, CFOs cite the top three obstacles threatening completion as: cooperation of the target company (54 percent), pricing costs (45 percent), and uncertainty of return on investment (40 percent).

CFOs said the top business considerations threatening earnings today are: health care costs (39 percent), weak domestic demand (37 percent), increased competition (31 percent), shortage of skilled talent (31 percent), and regulatory issues (28 percent).

Approximately two-thirds or more of all U.S. companies say they intend to hold constant the percentage of free cash flow they allocate to share repurchases (77 percent), dividends (76 percent), research and development (67 percent), and acquisitions (66 percent).

International Expansion

In 2016, 61 percent of companies surveyed report they will have some foreign market involvement, with 48 percent buying from foreign markets, 41 percent selling to foreign markets, and 21 percent having operations outside the U.S. The top three regions where these companies will have international operations are Asia (62 percent), Europe (61 percent), and Latin America (50 percent).

Seventeen percent of U.S. companies report they are planning to increase their foreign operations within the next two years, either by expanding current operations or establishing new ones.

Technology and Risk Management

Nearly all CFOs (96 percent) surveyed say they allocated budget dollars in 2015 to introduce new technology or upgrade existing systems. On average, companies devote 6 percent of their total budget to upgrading or replacing technology.

CFOs report the most common risk management programs currently in place at their companies are data security (91 percent), disaster coverage/protection (84 percent), other types of fraud (77 percent), operational risk (71 percent) and succession planning (68 percent).