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Senior Executives Cautiously Optimistic amid Slow Economic Recovery, Expect Revenue Increases but Higher Cost Pressures over Next 12 Months
While Most Executives Do Not Foresee an End to Cost-Cutting, Nearly Half Intend to Increase Capital Investments in the Next Twelve Months.Latest Corporate Executive Board Business Barometer Survey Shows Improvement in Executives' Outlook by Six Points Compared to Q4 of 2009
ARLINGTON, Va., Mar 04, 2010 (BUSINESS WIRE) -- The Corporate Executive Board (NASDAQ: EXBD) (CEB), a leading provider of best practice research and analysis focusing on corporate strategy, operations and general management issues, announced today that signs of the economic recovery are starting to surface, yet senior executives continue to be cautiously optimistic about their business's growth, according to the latest findings from The Corporate Executive Board Business Barometer, released today.

Based on a quarterly survey measuring the assumptions of nearly 400 senior executives about future economic conditions, the Business Barometer found that at the start of 2010, executives are more optimistic about future revenue growth. However, continued uncertainty about consumer demand, coupled with heightened costs pressures, are dampening business executives' outlook.

"Although an improvement over the fourth quarter of 2009, our Business Barometer reveals that executives are still cautious in their economic outlook for the year ahead, confirming that the recovery remains fragile," said Oleg Polishchuk of The Corporate Executive Board. "There are hopeful signs that businesses are starting to experience growth with most senior executives saying they expect a boost in revenue from rising new orders and the introduction of new products, and two-thirds expecting sales to new customers increase compared to last quarter. Furthermore, pent-up demand for CAPEX (hardware, software, facilities and manufacturing equipment) may boost growth as well."

"Companies are adopting a disciplined and balanced approach to growth. While we are starting to see the first signs of increasing capital investments, companies are also looking to maintain and advance efficiencies in G&A," said Michael Griffin of the Corporate Executive Board.

The Corporate Executive Board Business Barometer is a forward-looking index of expected business conditions condensed from a survey of more than 370 senior executives in North America across 33 industries. It measures the assumptions of senior executives across multiple disciplines on the impact that 12 key economic indicators and drivers will have on their business in the year ahead.

Early Indicators of Growth

In the last three months, The Corporate Executive Board Business Barometer has measured improvements in executives' outlook on sales, investments, production and access to credit - signs of future business growth.

  • Sixty-six percent of executives believe sales to new customers will be higher in the next 12 months (compared to 52 percent in Q4 2009), with 50 percent believing sales to existing customers will also improve.
  • While most companies continue to seek cost reduction in G&A, nearly half of companies are boosting organic growth investments. Forty-eight percent of executives expect higher CAPEX expenditures in the next 12 months (compared to 39 percent in Q4-2009), and 82% of companies are protecting or increasing R&D investments.
  • In the next 12 months, 58 percent of executives expect to introduce a higher number of new products (an increase of 57 percent over Q4 2009) and 68 percent expect to receive more new orders (compared to 57 percent in Q4 2009).
  • A majority of executives (59 percent) also expect expanded production levels in the next 12 months (an improvement over 40 percent in Q4 2009), with only 20 percent saying they anticipate a decline.
  • Executives' outlook on credit access improved considerably compared to the fourth quarter of 2009, with 56 percent saying they believe credit will be easier to obtain in the next 12 months (compared to 44 percent in Q4 2009).
  • In addition, 51 percent of executives expect consumer confidence to improve (compared to 48 percent in Q4 2009 and 71% of executives expect unemployment levels to stabilize or improve (compared to 40% in Q4 2009).

Factors Contributing to Increased Cost Pressures

Compared to last quarter, business executive concerns about cost pressure have increased.

  • Sixty four percent expect higher labor costs in the next year (compared to 60 percent in Q4 2009).
  • Over the next year, 65 percent of executives expect higher costs of core inputs, such as energy and non-energy commodities (compared to 48 percent in Q4 2009).
  • In the next 12 months, 53 percent of executives expect to operate in a higher interest rate environment (compared to 44 percent in Q4 2009).

Operating the largest, most powerful executive peer-to-peer business network, the Corporate Executive Board has more than 25 years of experience providing research, analysis, insights and resources on all issues related to strategy, operations and general management.

For more information on the Corporate Executive Board's Business Barometer, visit http://cebviews.com/economic-outlook/.

About The Corporate Executive Board

The Corporate Executive Board Company drives faster, more effective decision-making among the world's leading executives and business professionals. As the premier, network-based knowledge resource, it provides them with the authoritative and timely guidance needed to excel in their roles, take decisive action and improve company performance. Powered by a member network that spans over 50 countries and represents more than 80% of Fortune 500 and 70% of FTSE 100 companies, The Corporate Executive Board offers the unique research insights along with an integrated suite of members-only tools and resources that enable the world's most successful organizations to deliver superior business outcomes. Based in Arlington, Virginia, the Company employs more than 2,000 professionals in eight offices around the world. For more information, visit www.exbd.com.

SOURCE: The Corporate Executive Board

Corporate Executive Board
Joni Renick, 571-303-4074
jrenick@executiveboard.com