Deloitte “CFO Signals” Report 4Q 2012 – Notable Aspects

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 4th Quarter of 2012.

As seen in page 2 of the report, “Eighty-six CFOs responded this quarter. Three fourths of the CFOs are from public companies, and 77% are from companies with more than $1B in annual revenue."

Here are some excerpts that I found notable:

from page 4 :

But that doesn’t mean CFOs aren’t worried about the impacts of the fiscal cliff solution on an already-stumbling global economy. In fact, the potential detrimental impacts of the fiscal cliff became CFOs’ “most worrisome risk” this quarter, surpassing global economic stagnation and the European crisis – both of which were stronger concerns last quarter. And they name fiscal policy as their top priority area for better policy clarity going forward (corporate tax policy is a distant second).

Those worries are being particularly felt in the U.S. and Canada where CFOs’ sentiment has declined – not so much because pessimism has risen, but rather because fewer CFOs are becoming more optimistic. In the U.S., net optimism+(the difference between the percent of CFOs expressing rising and falling optimism) fell from zero two quarters ago and -16 points last quarter to -21 this quarter. And in Canada, it fell from the 40s over the past two quarters to -6 this quarter.

from page 5:

The good news is that CFOs’ sales and earnings expectations have rebounded from their record lows last quarter. Sales are expected to rise 5.6%* overall, above last quarter’s survey-low 4.8%*. Earnings are expected to rise 10.9%* overall, above last quarter’s survey-low 8.0%*.

The bad news is that fiscal cliff uncertainty and/or skepticism appears to be depressing planned investments. Capital spending is expected to rise just 4.2%*, below last quarter’s survey-low 4.6%*. Similarly, R&D investment hit its lowest expected growth rate on record.

Perhaps most worrisome, employment expectations have remained dismal. Domestic hiring is expected to rise just 1.0%* overall. This is a bit better than the survey-low 0.6%* from last quarter, but 28% of CFOs are now expecting cuts – a new survey high.

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I post various business and economic surveys because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these surveys.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1464.49 as this post is written