The Conference Board’s Measure of Business Confidence, which had declined to 53 in the first quarter of 2003, improved to 60 in the second quarter of 2003 (a reading of more than 50 points reflects more positive than negative responses). The quarterly survey covers approximately 100 CEOs in a wide variety of industries.

Lynn Franco
Director of The Conference Board’s Consumer Research Center
“Latest survey results show steady improvement in CEO confidence levels since the beginning of the year. Growing optimism about profits suggests stronger corporate performance ahead.”

Chief executives’ assessment of current business conditions has improved substantially, with the measure surging to 55, up from 40 in the first quarter. CEOs feeling that current economic conditions have improved rose to 35 percent, compared with 15 percent last quarter. CEO views of conditions in their own industries rose to 52 from 38.

Chief executives are also more upbeat about business conditions over the next six months. This measure rose to 66 in the second quarter, up from 60.

Profits Expected to Rise
About 65 percent of the surveyed chief executives expect profits to rise. But there are distinct differences among industries. About 67 percent of executives in the services industry expect profit increases. But among manufacturers, there are large differences between the durable goods industry (77 percent expect profits to rise) and non-durable sector (44 percent see profits rising).

Among executives who expect profits to advance, 37 percent cite cost reductions as a key reason, with 28 percent citing increases in market/demand growth and an equal proportion pointing to technology as the main source of profit growth. The remaining 8 percent of surveyed CEOs believe price increases will lift profits.