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CFO Insights — Special Edition: CFO Signals — 3Q13 survey

Published on: Sep 26, 2013

The CFO Signals survey on the second quarter of 2013, showed that CFOs were feeling better than they had in a while — especially relative to a year prior. And the good news is that their optimism has largely carried over to this quarter, bucking a trend that typically sees a precipitous drop in the second and/or third quarters.

A key reason for continued optimism is that most companies represented in the survey derive a very large proportion of their earnings from North America, and this region’s economy continues to be the relative bright spot. While North American economies are not strong by historical standards, both their current status and their near-term trajectories compare favorably to European economies that remain near recession and major emerging markets that are facing slower growth.

Those other economies, however, are giving CFOs pause. While Deloitte’s economists hold that global economic conditions are improving, albeit in fits and starts, recent volatility fueled by prospective changes in U.S. monetary policy, a new monetary policy in Japan, instability in China’s banking system, and unfolding events in Syria has clearly taken its toll; this quarter, CFOs’ expectations for year-over-year sales, earnings, investment, and hiring are among the worst we have seen.

What is a bit different (and perhaps encouraging) this quarter is that a rising number of companies appear focused on reassessing and adapting their strategies, and also on reducing direct costs — suggesting they may be making longer-term strategy adjustments to account for ongoing volatility in a “fits and starts” economic recovery.

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