The third quarter 2018 CEO Economic Outlook survey by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs finds that Virginia CEOs’ expectations for sales, capital spending, and employment over the next six months increased compared to their expectations last quarter. As a result, the survey’s index rose to its fourth-highest level ever, reversing declines of the past two quarters.  

Repeating a question from last quarter, CEOs were asked about the expected impact of tariffs on their business. This quarter, 60 percent expect no impact, 31 percent expect a somewhat negative impact, and only nine percent expect a large negative impact.  These results differ from those last quarter, indicating less impact of tariffs than expected last quarter, as portrayed in the table below. 

September 2018

June 2018

Large positive impact

0%

0%

Somewhat positive impact

0%

3%

No impact

60%

41%

Somewhat negative impact

31%

49%

Large negative impact

9%

6%

With the upcoming midterm elections, CEOs were asked how a Democratic takeover of Congress would impact the outlook for their business over the next 12 months. Twenty-four percent expect no impact, 21 percent expect a somewhat (13%) or large (8%) positive impact, while 55 percent expect a somewhat (32%) or large (23%) negative impact.

Seventy-nine percent of CEO respondents expect sales to increase over the next six months, up seven percentage points from the second quarter results. More than 37 percent expect sales to increase by more than 10 percentage points, roughly equal to the number who expected double-digit increases last quarter. Less than five percent expect sales to fall. 

Expectations for capital spending increased from last quarter. Nearly 42 percent of CEOs expect capital spending to increase, up over four percentage points from last quarter. Nearly half (48%) expect capital spending to remain flat, while the percentage who expected capital spending to decrease over the next six months fell by about three percentage points from last quarter. 

Expectations for employment rose from last quarter. Nearly 57 percent of respondent CEOs expect employment to increase over the next six months; nearly 44 percent expect employment to remain flat; no CEOs expect employment to decrease over the next six months. 

The Robins School and VACEOs jointly conduct the quarterly survey, which regularly asks about expectations for sales, capital spending and employment, plus other relevant issues, helping Virginia companies anticipate business conditions and plan for growth. The Robins School adapted the survey from the Business Roundtable, an association of CEOs of American companies that conducts a similar survey nationally. Randy Raggio, associate dean at the Robins School, administers the survey and collects the responses each quarter. The survey has been administered quarterly since 2010.

The following survey results from the second quarter of 2018 and third quarter of 2018 show projections for the next six months for sales, spending and employment:

Projected 6 months sales, spending and employment

2018 Q3

2018 Q2

Increase

No Change

Decrease

Increase

No Change

Decrease

How do you expect your company’s sales to change in the next six months?

 79.0%

 16.1%

 4.8%

 71.9%

 24.7%

 6.5%

How do you expect your company’s U.S. capital spending to change in the next six months?

 41.9%

 48.4%

 9.7%

 37.5%

 45.5%

 13.0%

How do you expect your company’s U.S. employment to change in the next six months?

 56.5%

 43.5%

 0.0%

 50.0%

 45.5%

5.2%



“The survey shows that CEOs are increasingly positive on the economy,” said Raggio. “This is partly explained by reduced concern about the potential negative impact of tariffs.”  

“Polarizing politics and tweetstorms from the top seem to have no negative effect on the outlook for small businesses in our area,” said Scot McRoberts, executive director of the Virginia Council of CEOs. “CEOs continue to struggle with workforce shortages but seem to be adapting to this reality.”

Economic Outlook Index

Survey Date

CEO Economic Outlook Index

Q3 2018

104.30

Q2 2018

92.73

Q1 2018

94.6

Q4 2017

106.30

Q3 2017

99.17

Q2 2017

103.63

Q1 2017

108.97*

Q4 2016

107.37

Q3 2016

89.67

Q2 2016

89.00

Q1 2016

102.00

Q4 2015

92.67

Q3 2015

99.80

Q2 2015

93.42

Q1 2015

93.90

Q4 2014

95.92

Q3 2014

96.10

Q2 2014

88.71

Q1 2014

86.07

Q4 2013

89.57

Q3 2013

92.53

Q2 2013

91.60

Q1 2013

86.40

Q4 2012

77.57

Q3 2012

81.17

Q2 2012

81.13

Q1 2012

94.10

Q4 2011

88.63

Q3 2011

81.17

Q2 2011

74.17

Q1 2011

85.63

Q4 2010

 92.27

Q3 2010

 94.47

Q2 2010

 81.33

* Record high

Sixty-two CEOs responded to the survey, which was administered September 19-25. Multiple industries are represented in the sample, including construction, manufacturing, finance and insurance and retail. The average company whose CEO responded to this survey had about $13 million in revenue for the most recent 12-month period. The average employment was about 44.

The Council continues to expand the survey beyond its members, offering any area business owners whose companies gross at least $1 million in annual revenue the opportunity to participate. If enough businesses participate, the Council will provide survey results by industry. Participation is free, and all participants will receive copies of the survey data.

Business owners and CEOs who would like to participate in the next survey should contact Scot McRoberts at smcroberts@vaceos.org.

The Virginia Council of CEOs is a nonprofit association whose mission is to connect the CEOs of small and mid-sized businesses for learning and growth. The Council is led by a volunteer board of directors, advisory board and a small staff. Currently, there are 240 CEO members. Learn more at www.vaceos.org.

The Robins School of Business is the only fully accredited, highly-ranked undergraduate business school that also is part of a highly-ranked liberal arts university. U.S. News ranks the Robins School’s part-time MBA program #44 in the country. The school’s executive education division offers open enrollment courses and customized leadership development, training and consulting to area businesses.

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