Small and midsize business (SMB) CEOs' confidence in the economy continued its upward trajectory in Q1 2024, per the latest CEO Confidence Index from Vistage.
This quarter marks four consecutive quarters of increased confidence, signaling sustained growth in economic optimism. In Q1, the Vistage CEO Confidence Index surged nearly four points to 85.9, maintaining its steady climb from 82 in Q4 2023, 76 in Q3 2023, 74.2 in Q2 2023, and 72.6 in Q1 2023.
"Much like athletes undergoing rigorous rehabilitation after sustaining serious injuries, our economy is steadily recovering from the unprecedented challenges imposed by the pandemic," says Joe Galvin, Vistage's chief research officer. "We've observed a notable improvement in economic sentiment, which has been a key driver behind the surging Vistage CEO Confidence Index. While expectations for revenue and profits have remained stable compared to the previous quarter, we've noticed a slight increase in investment for expansion initiatives, tempered by a decline in intentions to hire. We are cautiously optimistic we are slowly inching towards a 2025 growth cycle."
Key takeaways:
- 51% of SMB CEOs plan to increase hiring in the year ahead (down five percentage points from last quarter and below last year's 54%).
- Of those planning to expand their workforce:
- 6% report hiring plans for Q1 2024.
- 28% report hiring plans for Q2 2024.
- 19% report hiring plans for Q3 2024.
- 4% report hiring plans for Q4 2024.
- 42% plan to hire steadily throughout the next 12 months.
- Conversely, 10% of CEOs plan to decrease their workforce in the coming year (up from 7% last quarter).
- At the same time, the majority of CEOs (65%) report labor as the biggest source of inflation currently impacting their business.
- In response to increased costs, more than half of CEOs (51%) plan to increase prices for their product or service in the coming year (slightly below last quarter's 54%).
- 26% of SMB CEOs report that the economy has improved during the past year (up from 20% last quarter). 29% say the economy worsened in the past year, down from 58% a year ago.
- 26% expect the economy to improve in the year ahead (up from 21% last quarter and a 13 percentage-point gain since Q3 2023). 21% expect the economy to worsen in the year ahead, down from 53% a year ago.
- 60% of SMB CEOs expect increased revenues in the year ahead (the highest proportion in two years).
- 46% of CEOs project increased profits in the next 12 months.
- Key factors driving expectations for increased profitability include:
- 51% report cost-saving measures.
- 48% report cost efficiencies based on increased volumes.
- 43% implemented price increases.
- 9% report input costs decreasing.
- 36% of SMB CEOs report they are currently creating succession plans. 15% of CEOs have already identified their successor, and 20% have identified successors for key leadership positions within their company.
- When asked about plans for the leadership team this year:
- 59% are investing in development.
- 42% are promoting team members.
- 41% are enhancing succession planning.
- 35% are reorganizing leadership.
- 31% are recruiting for leadership positions.
- 27% are modifying compensation.
- 20% are replacing team members.
