AICPA Business and Industry Economic Outlook Survey Detailed - - PowerPoint PPT Presentation
Management Accounting AICPA Business and Industry Economic Outlook Survey Detailed Survey Results: 3Q 2019 Survey Background Conducted between July 30-August 21, 2019 Quarterly survey CPA decision makers primarily CFOs,
Detailed Survey Results: 3Q 2019
Management Accounting
Survey Background
– primarily CFO’s, CEOs and Controllers
2 3Q 2019 Economic Outlook Survey
Survey Highlights
3
Overall index drops three points to 72 All components down from Q2 with the exception of technology spending and other capital spending which were flat US Economy component now the lowest component at 60, down from 79 in Q3 2018. Expansion plans relatively firm Overall expansion plans decline slightly from 63% to 61%. Employment plans ease, availability of skilled personnel and turnover remain significant challenges.
3Q 2019 Economic Outlook Survey
Percentage optimistic about U.S. Economy dropped from 57% to 42% Global optimism falls to only 24% optimistic, down from 35% in Q2.
CPA Outlook Index (CPAOI)
4
The CPA Outlook Index is the composite of the following nine indicators at equal weights:
the next 12 months
months
The CPA Outlook Index is a robust measure of sentiment about the U.S. economy that is supported by the unique insight and knowledge that CEOs, CFOs, Controllers, and
have about the prospects for their own
expectations for revenues and profits, and their plans for spending and employment.
3Q 2019 Economic Outlook Survey
CPA Outlook Index (CPAOI)
5
A reading above 50 indicates a generally positive outlook with increasing activity. A reading below 50 indicates a generally negative outlook with decreasing activity.
3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 CPA Outlook Index 75 78 74 72 71 69 63 68 69 74 76 75 77 79 81 79 79 76 76 75 72
75 78 74 72 71 69 63 68 69 74 76 75 77 79 81 79 79 76 76 75 72
3Q 2019 Economic Outlook Survey
6
CPA Outlook Index (CPAOI)
3Q 2019 Economic Outlook Survey
Component 3Q18 4Q18 1Q19 2Q19 3Q19 ∆Q to Q ∆Y to Y U.S. Economic Optimism 79 71 72 70 60 10 19 Organization Optimism 81 79 77 75 72 03 09 Expansion Plans 80 77 76 75 72 03 08 Revenue 85 83 82 81 76 05 09 Profits 79 77 75 72 70 02 09 Employment 76 73 71 71 68 03 08 IT Spending 82 81 80 80 80 00 02 Other Capital Spending 78 73 74 74 74 00 04 Training & Development 75 74 75 73 72 01 03 Total CPAOI 79 76 76 75 72 03 07
7
CPA Outlook Index (CPAOI) vs. GDP
2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 CPA Outlook Index 79 79 76 76 75 72 Change in GDP 4.2% 3.4% 3.1% 3.1% 2.1%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 10 20 30 40 50 60 70 80 90 100
GDP Growth CPA Outlook Index
2.1.%
3Q 2019 Economic Outlook Survey
U.S. Economy, Organization and Inflation
8
Optimism for U.S. economy falls 15 points
Optimists cite continued overall economic strength, consumer spending and construction. Pessimists cite impact of tariff and trade issues, along with concern about length of recovery and
Organization optimism eases 4 more points
Optimism for respondent’s own
points from 62% to 58%
Expansion plans ease from 63% having plans to 61%. The percentage of companies expecting their businesses to contract increased to 17%.
Concern about inflation dropped to 23%; concern about deflation jumped to 11%
Concern about labor costs continues to be most significant at 37% Raw materials cost concerns gained 3 points to 32% Interest rate concerns returned to 20%, up from 18%. Energy cost concerns eased from 7% to 5%.
3Q 2019 Economic Outlook Survey
3Q 2019 Economic Outlook Survey Within A Survey
Has your business suffered any impact from trade conflicts in the past 12 months? If so, how big?
0% 1% 3% 51% 29% 11% 5%
0% 10% 20% 30% 40% 50% 60%
Significant positive impact Moderate positive impact Slight positive impact No impact Slight negative impact Moderate negative impact Significant negative impact 45%
3Q 2019 Economic Outlook Survey Within A Survey
What is your outlook
conditions over the next 12 months as compared to the past year?
6% 18% 30% 26% 15% 3% 2%
0% 10% 20% 30% 40%
Significantly more unfavorable Moderately more unfavorable Slightly more unfavorable Neutral Slightly more favorable Moderately more favorable Significantly more favorable
20% 54%
Optimism & Expansion
11
The economic
U.S. economy, your organization, and the expansion plans over the next 12 months
3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 U.S. 38% 62% 69% 64% 64% 74% 79% 74% 69% 57% 57% 57% 42% Organization 53% 61% 66% 64% 66% 70% 71% 70% 69% 68% 65% 62% 58% Expansion 62% 62% 67% 64% 65% 71% 72% 70% 70% 67% 66% 63% 61%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3Q 2019 Economic Outlook Survey
Inflation or Deflation
12
For your business, over the next 6 months, which are you more concerned about? Inflation
11% 28% 33% 31% 26% 27% 49% 47% 47% 49% 34% 29% 23% 18% 4% 3% 5% 5% 5% 3% 2% 2% 2% 6% 5% 11%
3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Inflation Deflation
3Q 2019 Economic Outlook Survey
Inflationary Risk Factors
13
Which of the following potential inflationary factors represents the most significant risk to your business?
Food costs Energy costs Raw material costs Labor costs Interest rates Other 3Q18 1% 6% 32% 36% 20% 5% 4Q18 3% 6% 28% 41% 19% 5% 1Q19 2% 7% 28% 38% 20% 5% 2Q19 3% 7% 29% 39% 18% 5% 3Q19 2% 5% 32% 37% 20% 4%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
3Q 2019 Economic Outlook Survey
Key Performance Indicators
14
Revenue and profit projections both fall
Expected revenue for coming twelve months decreased from 4.2% in Q2 to 3.5% in Q3 Profit projections declined from 3.1% in Q2 to 2.8% in Q3
Headcount plans ease slightly; healthcare cost projections remain constant
Anticipated rate of headcount increase eased from 1.9% to 1.7% Salary and benefit expected cost eases three tenths to 2.4% Healthcare cost projections remained constant with Q2 at an expected rate of increase at 5.1%
Spending plans mixed
Expected rate for IT spending constant at 3.4% Other capital spending also constant at 3.0% Expected rate of increase for training softens from 2.1% to 1.9% Marketing spending plans constant at 1.6% R&D spending plans ease a tenth from a 1.5% rate to 1.4%
3Q 2019 Economic Outlook Survey
Key Performance Indicators
15
Thinking about the coming 12 months, please comment on the probable change for your
each of the following key performance indicators
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Revenue 3.3% 2.9% 1.7% 3.0% 2.9% 3.6% 4.3% 3.9% 4.3% 4.8% 5.0% 4.8% 5.0% 4.3% 4.4% 4.2% 3.5% Profit 2.6% 2.0% 0.7% 1.5% 2.3% 3.1% 3.5% 3.2% 3.5% 3.8% 4.4% 4.0% 4.3% 3.4% 3.6% 3.1% 2.8%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Expected Growth in Revenue and Profits
3Q 2019 Economic Outlook Survey
Key Performance Indicators
16
Thinking about the coming 12 months, please comment on the probable change for your
each of the following key performance indicators
Employees, Salary & Benefits, and Healthcare Costs
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Employees 1.3% 1.0% 0.5% 1.1% 1.3% 1.6% 1.8% 1.8% 1.9% 1.8% 2.1% 2.1% 2.3% 2.0% 1.9% 1.9% 1.7% Salary & Benefits 2.0% 1.8% 1.4% 1.8% 2.1% 2.3% 2.3% 2.2% 2.4% 2.5% 2.7% 2.8% 2.8% 2.6% 2.6% 2.7% 2.4% Healthcare 5.8% 5.4% 5.4% 5.7% 5.6% 6.1% 5.6% 5.5% 6.3% 5.9% 5.6% 5.9% 5.7% 5.3% 5.2% 5.1% 5.1%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 3Q 2019 Economic Outlook Survey
Key Performance Indicators
17
Thinking about the coming 12 months, please comment on the probable change for your
each of the following key performance indicators
Pricing & Other Costs Average Change Expected
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Prices Charged 1.6% 1.5% 0.8% 1.3% 1.5% 1.8% 1.9% 1.9% 1.9% 2.1% 2.1% 2.5% 2.5% 2.2% 2.1% 2.2% 1.9% Input Prices 2.2% 2.1% 1.5% 2.1% 1.9% 2.4% 2.4% 2.5% 2.4% 2.5% 2.7% 3.2% 3.2% 3.0% 2.6% 2.6% 2.4%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
3Q 2019 Economic Outlook Survey
Key Performance Indicators
18
Thinking about the coming 12 months, please comment on the probable change for your
each of the following key performance indicators
Spending Plans - IT, Other Capital & Training
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 IT 3.0% 2.8% 2.3% 2.6% 2.8% 2.9% 3.0% 3.2% 3.5% 3.6% 3.7% 3.7% 3.6% 3.3% 3.5% 3.4% 3.4% Other Capital 2.5% 2.4% 1.5% 2.1% 2.4% 2.7% 2.6% 2.8% 3.3% 3.1% 3.9% 3.6% 3.5% 3.0% 2.9% 3.0% 3.0% Training 1.4% 1.4% 1.1% 1.3% 1.6% 1.6% 1.8% 2.0% 2.1% 2.2% 2.4% 2.4% 2.3% 2.0% 2.3% 2.1% 1.9%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 3Q 2019 Economic Outlook Survey
Key Performance Indicators
19
Thinking about the coming 12 months, please comment on the probable change for your
each of the following key performance indicators
Spending Plans Marketing & R&D
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Marketing 1.6% 1.6% 1.4% 1.4% 1.4% 1.5% 1.9% 1.8% 1.8% 2.0% 2.1% 1.9% 1.9% 1.9% 2.0% 1.6% 1.6% R&D 1.7% 1.2% 0.9% 1.1% 1.1% 1.5% 1.7% 1.5% 2.0% 2.0% 2.0% 2.2% 2.0% 1.7% 1.9% 1.5% 1.4%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 3Q 2019 Economic Outlook Survey
Hiring Plans
20
Have right number of employees Up 4 points from Q2 Have an excess
Up 3 points from Q2 Have too few, but hesitating to hire Down 3 points from Q2 Have too few and planning to hire Down 3 points from Q2
Remain relatively strong
3Q 2019 Economic Outlook Survey
Hiring Plans
21
Overall staff situation relative to your needs
Given current conditions, how would you characterize your overall staffing situation relative to your needs
(i.e., do you have excess capacity or are employees stretched)?
We have an excess number of employees We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other 3Q18 6% 46% 12% 32% 4% 4Q18 6% 50% 14% 28% 2% 1Q19 8% 48% 15% 26% 2% 2Q19 6% 47% 16% 28% 3% 3Q19 9% 51% 13% 25% 2%
6% 46% 12% 32% 4% 6% 50% 14% 28% 2% 8% 48% 15% 26% 2% 6% 47% 16% 28% 3% 9% 51% 13% 25% 2%
0% 10% 20% 30% 40% 50% 60%
3Q 2019 Economic Outlook Survey
Top Challenges Facing Organizations
Indication of the top three challenges for your organization
22 3Q 2019 Economic Outlook Survey
Availability of skilled personnel continues as the top challenge Domestic economic conditions jump 4 spots to #2 Domestic political leadership jumps 5 spots to #3 Domestic competition drops 1 spot to #4 Employee and benefit costs drops 3 spots to #5 Regulatory requirements drop 2 spots to #6 Staff turnover drops to 7th place Stagnant/declining markets re-enters in the 8th spot after falling off 4Q2017 Developing new products and services remains the same in the 9th place position Changing customer preferences stays the same in the 10th position
Top Challenges
23 3Q 2019 Economic Outlook Survey
3Q18 4Q18 1Q19 2Q19 3Q19
1 Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel 2 Regulatory requirements/changes Employee and benefits costs Domestic competition Employee and benefits costs Domestic economic conditions 3 Domestic competition Domestic competition Employee and benefits costs Domestic competition Domestic political leadership 4 Employee and benefits costs Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Domestic competition 5 Materials/supplies/ equipment costs Staff Turnover Domestic political leadership Staff Turnover Employee and benefits costs 6 Developing new products/services/markets Domestic economic conditions Domestic economic conditions Domestic economic conditions Regulatory requirements/changes 7 Staff Turnover Materials/supplies/ equipment costs Materials/supplies/ equipment costs Materials/supplies/ equipment costs Staff Turnover 8 Domestic economic conditions Developing new products/services/markets Changing customer preferences Domestic political leadership Stagnant/declining markets 9 Domestic political leadership Changing customer preferences Staff Turnover Developing new products/services/markets Developing new products/services/markets 10 Financing (access/cost of capital) Financing (access/cost of capital) Financing (access/cost of capital) Changing customer preferences Changing customer preferences
Industry, Region and Business-size Outlook
24 3Q 2019 Economic Outlook Survey
Retail trade recovers; wholesale trade falls Manufacturing constant; Technology gains Construction and Real Estate improve
Retail trade recovers from 40% to 54%
Wholesale trade drops further from 75% to only 52% optimistic Hiring for retail is expected to be slightly improved, increasing at a rate of 1.4% for the coming twelve months, vs. 1.2% in Q2 Manufacturing hiring is expected to soften, falling from a rate of 1.9% in Q2 to only 0.8% going forward from Q3. Technology hiring improved a tenth to 2.4% Construction optimism eased from 83% to 76% optimistic Real Estate and Property also fell from 67% to 52% optimistic Construction hiring continues to be strong improving from 3.1% to a 3.8% rate of increase. Real Estate hiring expectations also improved from 1.5% in Q2 to 1.9%. Manufacturing optimism continues to decline from 57% to 51% optimistic Technology gains another 5 points from 70% optimistic to 75%
Industry, Region and Business-size Outlook
25 3Q 2019 Economic Outlook Survey
Finance & Insurance and Professional gains; Services hiring eases Healthcare providers and Healthcare –
improve
Finance and Insurance optimism dropped from 77% to 67% optimistic Professional Services recovered another 6 points from 61% optimistic to 67% Finance and insurance hiring is also expected to ease to only 2.0%. Professional services hiring also improved from 2.9% in Q2 to 3.1% in Q3. Healthcare provider optimism eased from 63% in Q2 to 58% Healthcare – other optimism also declined from 57% optimistic to 42% Expected hiring by Healthcare providers tops the list in Q3, but increasing another 2 tenths to 4.0%.
Organization Optimism by Industry
26 3Q 2019 Economic Outlook Survey
52% 58% 66% 61% 61% 69% 56% 40% 54%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Retail Trade
63% 72% 77% 75% 78% 67% 57% 57% 51%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Manufacturing
64% 72% 80% 69% 60% 82% 65% 70% 75%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Technology
81% 64% 72% 76% 63% 63% 89% 75% 52%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Wholesale Trade
Organization Optimism by Industry
27 3Q 2019 Economic Outlook Survey
78% 75% 76% 78% 66% 75% 64% 67% 52%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Real Estate & Property
70% 80% 77% 76% 69% 69% 74% 83% 76%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Construction
50% 72% 78% 82% 84% 79% 65% 61% 67%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Professional Service
65% 73% 79% 69% 78% 72% 74% 77% 67%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Finance & Insurance
Organization Optimism by Industry
28 3Q 2019 Economic Outlook Survey
67% 79% 76% 88% 67% 65% 56% 57% 42%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Health Care - Other
56% 65% 61% 44% 61% 60% 51% 63% 58%
0% 20% 40% 60% 80% 100%
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Health Care Provider
Expected Employment Change by Industry
29 3Q 2019 Economic Outlook Survey
Thinking about the coming 12 months, please comment on the probable change for your
Number of Employees
1.6 1.9 1.3 1.2 1.2 1.5 2.7 2.3 2.3 2.9 3.1 3.8 0.6 0.8 1.3 1.4 1.4 1.9 2.0 2.3 2.4 3.1 3.8 4.0
0.0 1.0 2.0 3.0 4.0 5.0
Trans & Distribution Manufacturing Banking Not for Profit Retail Trade Real Estate Property Finance and Insurance Mining, Oil & Gas Technology Professional Services Construction Healthcare Provider
Q3 Q2
Industry, Region and Business-size Outlook
30 3Q 2019 Economic Outlook Survey
Regional
mixed results Employment projections by business size and expansion plans by size also reflecting level of optimism
Midwest – optimism dropped another 6% from Q2 to 54% West – optimism dropped another point to 60% South – also declined from 72% to 61% Northeast – optimism gained another 6% to 59%
For employers with > $1 billion in revenues, 8% now have excess employees, while 39% have too few. Of those with too few employees, 18% remain hesitant while 21% are planning to hire. Of those in the $100 million to $1 billion category, 43% say they have too few employees; 28% are hiring; while 15% are hesitant. In the $10 - $100 million range, 46% now have too few employees; of those with too few, 32% have plans to hire; only 14% are hesitant Of employers with revenues < $10 million 40% have too few employees, down 7% from Q1; 26% are planning to hire; 14% are hesitant. Expectations for expansion by businesses with revenues < $10 million gained 3 points to 63%. Plans for companies in the $10 - $100 million category eased 1 point to 66%. Companies in the $100 million to $1 billion range eased to 63% from 67%; those with revenues in excess of $1 billion fell another 2 points from 66% to 64%.
Organization Optimism by Region
31 3Q 2019 Economic Outlook Survey
The rating that best describes your view for the economic outlook for your own
the next 12 months.
3Q18 4Q18 1Q19 2Q19 3Q19 Midwest 73% 73% 64% 60% 54% West 65% 65% 74% 61% 60% South 69% 71% 67% 72% 61% Northeast 69% 64% 50% 53% 59%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Expansion Plans by Business Size
32 3Q 2019 Economic Outlook Survey
Indicate whether you expect your business to expand or contract over the next 12 months
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 < $10 million 61% 63% 67% 62% 63% 64% 60% 63% 62% $10 to <$100 million 58% 70% 74% 69% 70% 70% 67% 66% 64% $100 million to <$1 billion 68% 78% 72% 71% 73% 62% 67% 63% 54% > $1 billion 65% 75% 76% 78% 74% 71% 66% 64% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
48% of all businesses expect to expand a little in the next twelve months 13% expect to expand a lot 37% expect to contract a little or stay the same Less than 2% expect to contract a lot
Businesses in the > $1 billion range are most hesitant to hire
33 3Q 2019 Economic Outlook Survey
Given current conditions, how would you characterize your overall staffing situation relative to your needs
(i.e., do you have excess capacity or are employees stretched)?
We have an excess number of employees We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other < $10 million 3% 58% 13% 24% 4% $10 to <$100 million 11% 46% 12% 27% 1% $100 million to <$1 billion 11% 49% 13% 26% 5% > $1 billion 8% 52% 18% 21% 1%
3% 58% 13% 24% 4% 11% 46% 12% 27% 1% 11% 49% 13% 26% 5% 8% 52% 18% 21% 1%
0% 10% 20% 30% 40% 50% 60% 70%
Demographics
34 3Q 2019 Economic Outlook Survey
17% 31% 12% 11% 7% 7% 15%
Size of Organization
$0 to under $10 million $10 million to under $50 million $50 million to under $100 million $100 million to under $250 million $250 million to under $500 million $500 million to under $1 billion $1 billion or more
17% 65% 0% 16% 1%
Type of Organization
Publicly Listed Company Privately Owned Entity Government Not for Profit Other
5% 7% 4% 41% 2% 20% 9% 10% 4%
Position
President Vice President/SVP CEO/COO CFO Chief Officers (CAO/CAE/CIO/CTO/CRO/KMO) Controller/Comptroller Director/Managing Director Accounting, Audit, Tax or Technology Manager Other
For additional information contact:
Kenneth W. Witt, CPA, CGMA Senior Manager Management Accounting Ken.Witt@aicpa-cima.com Cary Jones Associate Manager Management Accounting Cary.Jones@aicpa-cima.com