Cap-Ex, Employment To Show Robust Growth - Page 1

Apr 1, 2004

CIO Update Staff

Chief financial officers of U.S. companies predict higher levels of capital spending and employment growth than they have for more than three years, according to the March quarterly CFO Outlook Survey, conducted by Financial Executives International (FEI) and Duke University's Fuqua School of Business.

An increase in capital spending is expected at 69% of companies over the next 12 months, with an average increase of 11%; more than double the five-percent increase expected last quarter. This quarter's cap-ex forecast is dramatically higher than predictions of just 18 months when companies anticipated contracted spending.

Tech spending is expected to increase four percent at 75% of the surveyed firms.

Employment Growth

In another positive trend, CFOs predict strong employment growth. Nearly three-fourths of surveyed companies plan to increase the number of employees in the coming year, while only 7% expect to reduce employment.

Overall, the number of employees should increase by a robust 5%. This is a significant improvement over expectations of the past three years when forecasts ranged from a decline to less than 2% growth.

"CFOs hold the corporate purse strings," noted Colleen Sayther, president and CEO of FEI. "Most have been managing in an environment where spending at a 'normal' rate was not the norm, and spending 'ambitiously' was virtually non-existent. Their predictions this quarter about an improvement in capital expenditures is very good news for the economy, and combined with their predictions about employment levels, very good news for the nation's workforce."

Offshore Component

One-quarter of companies in the March survey say their firms outsource to offshore locations. Averaged across all companies, including those that do not offshore any employment, 8% of total employment is located outside the United States. Among the companies that do already offshore, 18% of their workforce is non-U.S. workers.

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