CEOs of large and small businesses alike are down on the prospects of the U.S. economy, especially in job creation, according to a recent CEO survey conducted by NYSE Euronext, which owns and operates the New York Stock Exchange.
NYSE put together the comprehensive survey of CEOs in collaboration with ORC International, a global market research and consulting firm that collects information for private and public entities.
The survey, which has been conducted annually for eight years, drew feedback from 340 CEOs of publicly traded companies on the NYSE Euronext exchanges and 285 owners of small businesses in the United States.
The survey’s potential universe sports a large representation of companies such as ExxonMobil, McDonald’s, L'Oréal, and Unilever but misses other big names such as Apple—which is listed on the Nasdaq—as well as German and British companies, which are not part of Euronext and don’t have a NYSE listing.
Jeff Resnick, the global managing director who was responsible for putting together the survey, was nonetheless pleased with the turnout: “The global CEOs are not incentivized to answer our questions. We spent a great amount of time crafting relevant questions that capture the interest of CEOs,” he commented.
“This year’s topics of the economy—business growth and jobs—are critical issues for business leaders in 2013 and beyond.” The combined market cap of the public companies surveyed was $1.49 trillion and enterprises from Latin America, Asia-Pacific, Australia, and Canada were also represented.
While the volume of the responses of CEOs of large publicly traded companies was very good, the content of the responses was not. Nearly half of the respondents thought global economic conditions were “poor” compared to only 24 percent in 2011 that gave the same answer, according to the report. Eighty-two percent of large company CEOs and 77 percent of small-business owners only expect moderate global growth for 2013.
Their assessment for the economy is lackluster, but they do expect their own companies to capitalize on opportunities. Seventy-four percent of public companies think their businesses are going to grow in 2013, and 58 percent of small businesses think the same. Small companies have a longer planning horizon and 74 percent believe that business is going to pick up over the next three years.
Resnick says the phenomenon of lower growth expectations for the economy and optimistic projections for their own businesses is due to the fact that those companies want to take opportunities that present themselves now despite a sluggish economic climate to reap the rewards in the medium-term future.
This attitude is reflected in the survey, as less than half of the companies think that overall economic trends will drive growth, but believe that overall management and trends in their respective industries are more important drivers.
Jobs at Top of Agenda
When it comes to job creation, the survey results are more difficult to interpret.
While 64 percent of large public companies are planning to add employees on a net-basis, 61 percent of small businesses are aiming to keep their number of employees stable.
This is striking as the survey shows that more than half of the respondents expect the small businesses to create most jobs. Those small businesses themselves do not seem to be able to take on the responsibility—only 49 percent of them say that the private sector is responsible for job creation, compared to 69 percent of their large-cap colleagues.
Part of the reason smaller companies are not ready to create as many jobs as expected is due to lack of financing. Resnick expanded on the critical role of access to capital for business growth, in particular to small businesses. “It is extremely hard for small businesses to get sufficient capital to fund expansion,” he says, which makes it difficult for them to exploit business opportunities and hire people.
He further notes that there could be a combination of cures, such as more aggressive lending to the small business community by banks, private initiatives such as NYSE Euronext’s Big Start Up, and government support.
While small businesses might need to be encouraged to hire, there is some definitive good news in the survey: 74 percent of new jobs will be created in North America.
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