CEO confidence improved markedly during the fourth quarter of 2006, according to a poll released earlier today. The Chief Executives’ Confidence Measure, a quarterly survey conducted by Washington, D.C.-based research firm The Conference Board, had fallen to 44 in the third quarter.
But the measure improved to 50 by the end of December, which means that a majority of CEO respondents were bullish rather than bearish on the economy. The survey polls roughly 100 business leaders working in a variety of industries.
Commercial real estate is largely driven by economic growth, which creates occupancy demand for its many classes of property. If CEO confidence is low, too, businesses may be reluctant to expand or relocate their offices.
“The bounce-back in CEO confidence suggests further economic growth in the first half of 2007. However, there is little to suggest a significant strengthening or deterioration in the pace of growth,” says Lynn Franco, director of The Conference Board Consumer Research Center.
CEO’s confidence in current-day conditions was mixed at best. Only 24% of CEOs claimed that the current economic environment during the fourth quarter was better than the previous quarter. Even so, only 16% of CEOs labeled the third quarter economic environment as better than the prior quarter.
Most CEOs are bullish on the short-term economic outlook. Nearly 29% of business leaders expected economic conditions to improve in the next six months, up from 16% during the third quarter. Expectations for their respective industries were also improved: Roughly 34% anticipated an improvement during the next six months, and that was up from just 20% during the third quarter.