New York City, NY – The outlook of the nation’s chief executives on the business environment over the next 12 months was a mixed bag as 2018 came to a close, according to the quarterly Marcum CEO Survey.  The survey is conducted by Marcum LLP, a national accounting and advisory firm, in partnership with Chief Executive Group, publisher of the monthly CEO Confidence Index.

 

While CEOs choosing ratings at the most positive end of the scale increased decisively in the fourth quarter, those in negative territory also gained.

 

7.11% of CEOs gave their outlook a 10, the first increase at the most optimistic rating point on the 1-10 scale following a three-quarter slide, and nearly matching the 7.88% recorded in the first quarter. Those rating their outlook a 9 increased to 21.33%, the second consecutive gain after registering 19.71% in the third quarter. 

 

CEOs feeling less confident about the future also increased, with an equivalent percentage of CEOs – 28.44% -- rating their outlook a 4, 5, or 6. This was more than double the 13.69% of CEOs who placed themselves in this range in the first quarter.  

 

CEOs choosing the more neutral ratings of 7 or 8 declined to 42.18% of respondents from 53.76% in the prior quarter and 58.92% in the first quarter of the year. The decline in the neutral ratings is a result of more respondents shifting to strong pro or con positions. 

Less than 1 percent of CEOs rated their outlook a 1, 2, or 3.

 

“CEOs’ outlook on the business climate was invigorated at both the positive and negative ranges of the confidence scale during the fourth quarter of 2018, with more executives taking definitive positions, and fewer putting themselves in neutral territory. This is a reflection of the general mood in our country right now, as we continue to see pronounced polarity on most national issues. However, it is very encouraging to note that CEOs’ overall outlook on the business environment is decidedly upbeat, with the vast majority of respondents in the upper ranges of the scale,” said Jeffrey M. Weiner, Marcum’s chairman and CEO.

 

95.26% of CEOs rated their outlook 5-10. This highly favorable result nonetheless represents a 4-point fall-off from the first quarter of the year, when 99.17% of respondents expressed nearly universal optimism about the business environment.

 

The weighted average of responses to the fourth quarter Marcum survey was 7.46, down from 7.55 in the third quarter and 7.77 in the first. 

  

Short-Term Investment Priorities 

CEOs again identified talent recruitment and technology as their top investment priorities for the next 12 months, accounting for nearly half (48.24%) of Priority 1 responses. Workforce training emerged as the Priority 2 leader (19.00%), and mergers & acquisitions (21.13%) led as Priority 3.

 

Top Business Planning Influence 

Consistent with CEOs’ investment priorities, availability of talent remained the most important influence for business planning over the next 12 months, with nearly a third (30.48%) of respondents making this selection. The next defined important influences were technology (12.38%) and labor (11.43%), following “other” at 13.81%. Notably, access to capital was the only influence to decline in importance over all four quarters, starting the year at 11.16% and ending at 7.62%.

 

Product Diversification 

The importance of product diversification slid over the course of 2018, with 86.06% of respondents rating diversification 5-10 in the fourth quarter, versus 90.30% in the first quarter. 13.46% of CEOs rated diversification a 10, down significantly from earlier periods, while those rating it an 8 or 9 increased (27.88% and 12.98%, respectively).  This put product diversification in clearly bullish territory for the majority of CEOs. 

 

CEO Insights 

A number of CEOs provided additional insights about their views in optional open-ended comments. The comments elaborated on the reasons for their rating choices, represented by the following:  

    

  • “We MUST be able to access talent to continue expansion of the economy.  If talent is not available, business will move to where it is... We import products.  We import parts.  We may need to import talent.” 
  • “Our industry is highly fragmented with no single competitor having more than 1% market share.  As the economy slows, it will lead to consolidation.” 
  • “Digitization is the major disruptor to all businesses.” 
  • “Growth without the ability to fulfill commitments is a service business killer.” 

 

About the Respondents 

C-suite executives at 209 companies participated in the Marcum CEO Survey for the fourth quarter of 2018. Of those providing revenue information, 187 (91%) had revenues of up to $1 billion in 2017; 19 (9%) had revenues in excess of $1 billion.

 

Participating industries included:  

 Advertising/Marketing/PR/Media/Entertainment

 Construction/Engineering/Mining

 Energy/Utility

 Financial Services (Banking, Insurance, Brokerage, Investment)

 Government and Non-Profit

 Health Care (Providers and Payers)

 High Tech/Telecommunications/Information Technology

 Manufacturing (consumer goods)

 Manufacturing (industrial goods)

 Pharmaceuticals & Medical Products

 Professional Services (Legal, Consulting, Accounting, Architecture)

 Real Estate

 Retail Trade

 Transportation (Airlines, Trucking, Rail, Shipping, Logistics)

 Travel and Leisure (Hotels)

 Wholesale Distribution

 Other 

 

For the complete Marcum CEO Survey for the fourth quarter of 2018 and an archive of prior quarters, visit www.marcumllp.com.

 

For more information, visit www.marcumllp.com.

 

About Marcum

Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation, with offices in major business markets throughout the U.S., as well as Grand Cayman, China, and Ireland. Headquartered in New York City, Marcum provides a full spectrum of traditional tax, accounting, and assurance services; advisory, valuation, and litigation support; managed accounting services; and an extensive portfolio of specialty and niche industry practices. The Firm serves both privately held and publicly traded companies, as well as nonprofit and social sector entities, high net worth individuals, private equity funds, and hedge funds, with a focus on middle-market companies and closely held family businesses.  Marcum is a member of the Marcum Group, an organization providing a comprehensive array of professional services. For more information, visit www.marcumllp.com.

 

Attached File(s):