News USA THIN 15
impact of new regulations/ legislation (32 percent) and cyber-threats (23 percent) as the greatest issues posing a threat to business models.
Additionally, when asked about the most significant growth barriers facing companies over the next year, execs most often cited energy prices (38 percent), increased taxation (34 percent) and regulatory and legislative pressures (29 percent).
“Energy companies are operating in a dynamic and exciting environment, but regulation uncertainties and vulnerability around evolving cyber threats raise genuine concerns for industry executives,” said Kunasek. “What is exciting to see, however, is despite these concerns, energy executives are positioned for future growth of both their own organizations and the energy industry as a whole.”
BUSINESS LEADERS INCREASINGLY OPTIMISTIC ABOUT ECONOMY
Optimism for the nation’s economic outlook among U.S. business leaders continued to rise from first quarter 2014, according to the latest data from the Grant Thornton International Business Report (IBR), a survey of more than 3,300 business leaders in 45 countries. In second quarter 2014, optimism among U.S. business leaders rose eight percentage points
to
a net balance of 74 percent, marking
the highest level since 2004.
The increase in optimism in the United States is consistent with what is occurring globally. In second quarter 2014, optimism among global business leaders rose
two
percentage points to a net balance of 46 percent. This marks the highest level in the survey’s history, and a 19 percentage-point increase from one year ago.
The notion that U.S. business
“Following a strong first quarter, business leaders across the globe continue to show levels of confidence we have not seen in more than a decade,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “The increase in optimism, coupled with recent improvements in key economic indicators may finally provide business leaders the confidence to invest in their businesses,
optimism is on the rise correlates with other recent research from the Grant Thornton LLP 2014 Spring CFO Survey. The survey indicated that, for the first time since 2006, more CFOs believe the state of the U.S. economy will improve (51 percent) rather than remain the same or worsen (49 percent) during the next six months. This also marks the highest percentage in that survey’s history.
create jobs and grow their operations in the coming months.”
IBR data reveals G7 business optimism rose to a record high net 53 percent, up from 28 percent in fourth quarter 2013. Optimism in the European Union, driven by Germany (79 percent), the United Kingdom (80 percent) and Ireland (84 percent), rose six percentage points to a net 43 percent, marking its highest level since 2007.
While optimism in the European Union and G7
economies both reached record highs, BRIC business optimism dropped four percentage points to a net balance of 36 percent. Optimism in China, the world’s
second largest
economy, also dropped in second quarter 2014. Chinese business optimism decreased to a net balance of 30 percent, an eight percentage-point decrease from last quarter, but a substantial increase from net 4 percent one year ago. Additionally, Japanese business optimism decreased to a net 5 percent, down from 17 percent in the previous quarter.
T SUSTAINED JOB CREATION SINCE LATE 90S
by the temporary hiring of census workers.
late 1990s. The only month in recent history in which job creation was substantially higher was May 2010, driven
The overall improvement in the labour market seen in today’s payroll data suggests that the economy has shown further improvement this year and that the weak Q1 GDP figures that were released in June were a blip in the underlying trend, likely driven by the severe weather. Looking ahead, Cebr expects GDP growth to return to a pace of close to 3.0% year-
on-year in the remaining quarters of 2014.
The US unemployment rate, also released this month, was reported to have fallen back to 6.1%, down from 6.3% in the previous two months. While this is close to a six-year low, the figure likely overstates the health of the labour market. More than a third of the working-age population of the US remain out of employment and have given up their job searches: the participation rate, which measures the
share of the population either working or looking for work, remained unchanged at 62.8% in June – an over 30 year low. Cebr expects the participation rate to increase in the coming months as discouraged workers begin returning to the labour market now that it has started looking healthier. If they do, this will reveal that there is much more slack in the US economy than the current unemployment rate suggests.
Such conflicting labour market signals paint an overall mixed
picture for the US Federal Reserve. While prospects for GDP growth in the second quarter are now looking more robust, the stronger the employment and GDP figures get the greater the pressure will be on the Federal Reserve to raise interest rates sooner than markets currently expect. Cebr expects interest rates in the US to rise in early Q2 2015, following the completion of the tapering of its asset purchases in Q4 2014.
FINANCEMONTHLY 15
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