U.S. business optimism leaps in third quarter to near-record levels
By Business Wire News
By Business Wire News
Optimism for the nation’s economic outlook among U.S. business leaders rose 20 percentage points in third quarter 2015 to a net balance of 74 percent, marking only the second time since 2004 it had eclipsed net 70 percent, according to data from the Grant Thornton International Business Report (IBR). According to the survey of more than 2,500 business leaders in 36 economies, the United States is the fifth most optimistic economy overall.
In third quarter 2015, business optimism dropped from net 58 percent to net 38 percent across the European Union, and from net 54 percent to net 33 percent in the eurozone. Confidence in China, the world’s second-largest economy, decreased to net 26 percent, down 20 percentage points from the previous quarter. Globally, net 38 percent of businesses are optimistic, down from net 45 percent last quarter, with the most confident businesses in Ireland (net 90 percent), India (net 87 percent), the Philippines (net 86 percent) and Nigeria (net 76 percent).
While confidence decreased globally, U.S. business leaders didn’t share the same sentiment. In third quarter 2015, the United States ranked as the fifth most optimistic economy, partially because of increased plans to invest in research and development (R&D) and all-time high export expectations. The percentage of U.S. companies planning to invest in R&D increased to net 36 percent, a 4 percentage-point increase from last quarter and a 9 percentage-point increase from one year ago. Additionally, U.S. export expectations increased to net 26 percent, marking the highest level in survey history and a 1 percentage-point increase from the previous quarter.
“While China dominated the global business headlines, American business leaders may not have been fazed by the news, according to our study. Despite currency devaluation in China, confidence among U.S. business leaders continued to rise, and the spending in R&D and the growth in exports are evidence of that,” said Mike McGuire, chief executive officer of Grant Thornton LLP. “However, there’s some less-encouraging news in the fact that long-term investment decisions are still on hold. A majority of those surveyed are still hesitant – optimistic, but hesitant.”
While optimism among U.S. business leaders has risen, sentiment about other areas of U.S. business performance and stability remains relatively unchanged. U.S. companies’ plans to invest in new buildings in the next 12 months remained stagnant at net 26 percent in third quarter 2015, while plans to invest in plants and machinery increased just 2 percentage points to net 22 percent. Revenue expectations among U.S. business leaders remained net 70 percent in third quarter, while profitability expectations decreased 9 percentage points to net 56 percent.
IBR data also reveals that U.S. hiring expectations remained relatively high at net 45 percent, down just 3 percentage points from last quarter, while U.S. pay raise expectations improved 7 percentage points to net 17 percent of U.S. business leaders expecting to offer employees an above-inflation pay raise in the next 12 months. A net balance of just 29 percent of U.S. business leaders cite economic uncertainty as a constraint on their ability to grow their operations in the next 12 months, up just 7 percentage points from the previous quarter, but a 6 percentage-point decrease from one year ago.
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Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of more than 10,000 businesses per year across 36 economies. This unique survey draws upon 22 years of trend data for most European participants and 11 years for many non-European economies. For more information, please visit: www.grantthornton.global/insights
Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone. For percentages not identified as a percentage of respondents, the net percent balance is reported as the proportion of companies reporting they are optimistic/the trend has increased less those reporting they are pessimistic/trend has decreased.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 2,580 businesses from all industry sectors across the globe conducted in August and September 2015. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.
“Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.
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