CFOs economic concerns grow amid China turbulence

Chief financial officers are paring back their business expectations as their worries about the global economy grow, according to a new survey.

The CFOs are concerned about how China’s slowing economy could affect the rest of the world and prospects for their own companies, according to Deloitte’s July-September survey, which includes responses from more than 100 CFOs from large North American companies.

{mosads}Capital spending, revenue growth and hiring expectations are all near survey lows at 4.3 percent, 4.4 percent and 1.4 percent, respectively, while earnings growth expectations matched last quarter’s survey-low at 6.5 percent.

“While CFOs are generally an optimistic group, they are understandably taking a more cautious view of the global economy and their own companies than in previous quarters,” said Sanford Cockrell III, national managing partner of the U.S. CFO Program, at Deloitte.

“With so many sources of volatility and uncertainty, highlighted by challenges in China, it is difficult for most companies to aggressively pursue growth — and this is reflected in the conservative investment and hiring expectations expressed by CFOs this quarter,” he said. 

Woes around the Chinese economy abound among CFOs, with only 4 percent describing it as good, a sharp decline from 23 percent in the April-June quarter.    

While this survey posted an 11th straight quarter of positive net optimism at 14.2 percent, it is at the lowest level in almost three years. 

Nearly 60 percent of respondents remain optimistic about the North American economy while only 5 percent say the European economy is in good shape, which is unchanged from the second quarter. 

The survey also identified top internal and external risks, including finding and retaining talented employees, growing cyber security concerns and other risks such as more federal regulations, falling oil prices and a slowdown of the U.S. economy.

Responses from CFOs were collected over the two-week period before U.S. equity markets declined sharply on Aug. 24.