Optimism among private company CEOs dips slightly in the face of regulatory, political, and economic uncertainty

This past quarter, only 45 percent of the nation's leading private company executives surveyed for PricewaterhouseCoopers' Private Company Trendsetter Barometer voiced optimism about U.S. economic growth over the next twelve months -- six points below the previous quarter’s 51 percent, though 11 points higher than a year ago. Private companies with international operations remained slightly more optimistic about U.S. economic growth than their domestic-only counterparts, 46 percent and 44 percent, respectively. As for optimism about the global economy, international marketers' confidence dropped to 37 percent, down ten points from last quarter's 47 percent but above last year’s 30 percent.

Despite an increased sense of uncertainty, more than three quarters (76 percent) of leading private companies expect positive revenue growth for their businesses over the next 12 months, with 38 percent anticipating double-digit growth and 38 percent expecting single-digit growth. Only 12 percent forecast negative revenue growth, while just 14 percent forecast zero growth. Trendsetter CEOs are now forecasting an average 9.1 percent growth for their own companies’ revenue over the next 12 months, down a point from last quarter’s 10 percent forecast.

In keeping with increased uncertainty in the market, concern about lack of demand continues to be the main potential barrier to growth -- cited by 78 percent of respondents (up four points from the previous quarter).

Concerns over increased taxation (52 percent, up seven points from the previous quarter) and legislative/regulatory pressures (50 percent, up two points from the previous quarter) were cited by more Trendsetter CEOs this quarter, in line with increased uncertainty about global and U.S. economic performance and governmental policies.

Looking ahead, 54 percent of survey panelists plan to add employees to their workforce over the next 12 months. This is similar to the previous quarter’s 53 percent and well above last year’s 34 percent. Only 2 percent plan to reduce their workforce, and 44 percent will keep their hiring levels relatively the same. An overall increase of 1.8 percent is planned for the panel’s composite workforce, up slightly from 1.5 percent last quarter and up from 1.4 percent a year ago. Most of the increase in prospective hiring is among small private businesses, which added 5.8 percent to their composite workforce versus 1.5 percent for large private businesses.

The number of private companies planning major capital investments over the next 12 months fell to 29 percent in the second quarter of 2010, down from last quarter's 32 percent. However, marketers doing business abroad -- especially the 30 percent that are selling in China, India, and Brazil -- remain ahead of their domestic-only peers in prospective spending over the next 12 months (50 percent). Overall, 31 percent of international marketers and 26 percent of domestic-only companies plan to increase capital spending. Operational spending plans for the next 12 months remain high at 58 percent, led by new product or service introductions (25 percent) and information technology (26 percent).

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