In the second quarter of the year, CFOs seem to have regained confidence in the North American economy, according to a study conducted by Deloitte. The results show national hiring prospects are rising and investment in growth activities increasing.
After surveying the CFOs of large North American companies, Deloitte announced a quite positive mindset in terms of economic prospects in the region. The net optimism of Canadian CFOs has increased from +7 in the previous quarter to +39 in the second quarter. In this sense, they have found a level of optimism similar to six months previous, although not managing to equal that found among American CFOs. They went from a net optimism of +33 to +46 in the same period
Another piece of good news – this perception of the state of the economy also has an impact on the strategies undertaken by large Canadian companies. Their prospects for increased hiring have thus risen to 5.4%, compared to 3.5% for the previous quarter. They also forecast an increase in capital expenditures of 5.5% after forecasting a decline of 9.2% in the previous quarter. Another point raised, CFOs have narrowed the gap in their expectations for growth in sales and profits to a growth of 4.9% and 8% respectively, compared to 7.4% and 11.8% in the previous quarter.
The question of the use of cash
Finally, several CFOs said the want to use the company’s liquidity differently. Rather than holding on to it to protect themselves from risk, they now plan to use it for investment (internally more than externally), repay debts, redeem shares or pay dividends.
Cause for concern
Nonetheless, the managers interviewed raised a few areas of concern which could put the brakes on growth. First of all, they cite the public policies of taxation and government spending and they also dwelt on environmental regulations, especially CFOs in the energy and resource industries.