Economy Better But…

A recent study by The Business Council finds the global economy is better than a year ago but has flattened or weakened in most areas of the world. In addition, an assessment of business conditions in the U.S. by Tatum LLC concludes executives are less positive than a month ago. Both studies report that the economic conditions for hiring gains are not present.

Focal Points:

• A survey of CEOs by the Business Council on their outlook for better business conditions over the next six months finds they expect general stagnation globally, except parts of Asia.

Geography	May 09	October 09	February 10
U.S.	33.8	61.4	66.7
China	38.3	65.6	62.5
Asia	27.1	59.4	69.2
Europe	12.9	47.7	39.7
Global	25.0	67.7	67.6

• The Council's survey also finds U.S. executives are moving out of their defensive postures and are planning on growth. But CEOs remain wary on the hiring front. Nearly three out four executives said the U.S. jobless rate would either stay pretty much where it is or head higher. Asked for their outlook on their own industries over the next six months, 60.8 percent of the CEOs expressed that they expected things to improve, down from 62.9 percent in the survey conducted last fall. CEOs also stated that if they did hiring, it would be in markets outside of the U.S. This is driven by the fact that only 6.8 percent of the CEOs surveyed believe the U.S. economy will grow at a rate of 3.1 percent or more in 2010.
• The February Tatum survey of executives and consulting professionals on business conditions points to a less positive outlook than the January position. Capital expenditure commitments declined in the last 30 days and the outlook remains flat for the next 60 days. Employment dropped over the last 30 days and remains negative going forward even though anecdotal evidence shows the demand for temporary and part-time help rising. Capital availability and pricing remains under pressure and shows no sign of improvement, according to the survey. 

Experton Group believes the growth due to inventory restocking is winding down and economic growth in Europe and North America will be not be strong enough throughout 2010 to drive a significant number of new jobs. Experton Group expects actions by governments in these geographies to not be economically stimulative. Asia has a higher probability of being the engine of growth but weaknesses exist that could result in slow growth there as well. IT executives should expect to remain under pressure to contain and reduce costs while satisfying corporate business demands. IT executives should plan on capital constraints remaining in place, seek alternative financing sources and pursue project initiatives that have a positive ROI within the fiscal year.