Business growth prospects rising in mature economies
Eurozone business leaders more bullish than the global average for the first time in 15 quarters.
Profitability, hiring and revenue expectations among business leaders in mature economies soared in first quarter 2015, according to the latest data from the Grant Thornton International Business Report (IBR), a survey of more than 2,500 business leaders in 36 countries.
In first quarter 2015, U.S. profitability expectations improved 34% to net 68% of business leaders expecting to see profits climb in the next year. U.S. hiring expectations increased to 56%, up 25% from last quarter, while revenue expectations increased to 71%, a significant increase from 35% the previous quarter.
While business growth prospects in developed nations rose in first quarter 2015, optimism for the economic outlook among U.S. business leaders dropped 16% to 43%. Globally, just 33% of businesses are optimistic, but IBR data highlights eurozone confidence rising toward pre-crisis levels. There, optimism spiked to 34%, a significant increase from 13% last quarter. This marks the first time in 15 quarters eurozone business leaders are more bullish than the global average.
“Business leaders are seemingly more confident about areas of business performance and stability they can control within their own operations versus the direction of their respective economies,” said Stephen Chipman, senior vice chair at Grant Thornton LLP.
With the rise in the dollar, outlook for investment is weak. In first quarter 2015, U.S. companies’ plans to invest in research and development remained stagnant at 37%. Companies’ plans to invest in new buildings in the next 12 months decreased to 23%, down from 39% last quarter, while plans to invest in plants and machinery decreased 13% to 24%.
“The strong U.S. dollar poses a serious threat to the global economy. It’s clear that U.S. business leaders will require more certainty in the macro environment before making significant investment decisions,” Chipman added.
More than half (53%) of manufacturing leaders expect their industry’s revenue to climb in the next year, up from 43% last quarter. Revenue expectations in the technology sector increased to 77%, up from 42% the previous quarter. And 52% of retail leaders expect their industry’s revenue to climb in the next year, a slight increase from 51% last quarter.
