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US CFOs bullish on company prospects but cautious over China and Europe – Deloitte survey

Overall, CFOs are more bullish about their own companies' prospects in the coming year but there is a huge amount of caution regarding Europe and China, as well as US equity markets.

This is according to a quarterly survey of 140 CFOs from North America. CFO Signals: 2016 Q2 found that, following a difficult start to the year for the global economy, CFOs’ confidence in their own companies’ prospects has started to rebound in Q2 2016, after hitting a three-year low in Q1. Expectations for sales, earnings, capital spending, and domestic hiring have improved but remain low. There is optimism that the North American economy will improve over the coming year but only 15 per cent of the survey's respondents felt positive about the prospects of Europe's economy.

US equity markets 'overvalued'

Four-fifths of the CFOs surveyed by Deloitte said that debt is currently an attractive financing option. In contract, 56 per cent said that the US equity markets are overvalued. CFOs also said their CEOs are particularly looking to them to provide the roles of “fact providers,” “challengers”.

Some of the key figures produce by the survey include the following:

  • 49 per cent of CFOs express rising optimism (up from 33 per cent), in their companies’ prospects, while the proportion citing declining optimism fell from 31 per cent to 19 per cent.
  • 40 per cent of CFOs describe the North American economy as good or very good and 39 per cent expect better conditions in a year;
  • only 9 per cent regard China’s economy as good;
  • and just 6 per cent describe Europe’s economy as good and only 15 per cent think it will improve in a year;
  • 56 per cent of CFOs say US equity markets are overvalued (up dramatically from 30 per cent last quarter), while four-fifths said that debt is currently an attractive financing option;

Deloitte's infographic provides further insight into the survey's findings:

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