DENNIS SEID: Business optimism highest since 2004

DENNIS SEID

DENNIS SEID

According to the latest Grant Thornton International Business Report, or IBR, business leaders in the U.S. are the most optimistic they’ve been in a decade.

And that’s a good thing, considering that we had that Great Recession thing in the middle of the past decade. Despite the stock market’s recovery the past couple of years, there’s still an economic uneasiness, though it’s hard to pinpoint.

The IBR first-quarter survey included more than 3,300 business leaders in 45 countries, and it showed optimism among U.S. business leaders rose 30 percentage points to a net balance of 66 percent.

Global optimism seems to be increasing as well: 44 percent of businesses worldwide are optimistic about the economic outlook, the highest level since 2007, and a 17 percentage-point increase from the previous quarter.

Optimism in China, the world’s second-largest economy behind the U.S., increased to 38 percent, up from 22 percent in fourth quarter 2013. Japanese business optimism increased 11 percentage points to 17 percent.

The BRIC countries – Brazil, Russia, India, China, all grouped together because of their emerging-economy status – as a whole saw their business optimism rise from a net balance of 22 percent to 40 percent, driven by a 26 percentage-point increase in Brazil. Optimism in Brazil rose to 36 percent, up from 10 percent in the fourth quarter of 2013. Business sentiment in India improved to 89 percent, up 20 percentage points from last quarter.

Again using Grant Thornton data, the survey revealed “there has been marginal improvement in the United States regarding plans to invest in plants and machinery (43 percent), while plans to invest in research and development in 2014 (17 percent) has remained flat.”

Meanwhile, that uncertainty mentioned earlier? Twenty-nine percent of U.S. business leaders cite “economic uncertainty as a constraint on their ability to grow their operations in the next 12 months,” according to the survey. But that figure is down from 37 percent in the previous quarter.

Other survey results showed 60 percent of business leaders expect to see profits rise in the next year, while hiring expectations rise from 38 percent to 45 percent. Revenue expectations dropped to 64 percent, compared to 65 percent in the fourth quarter, but significantly higher than the 46 percent from the first quarter of 2013.

In Northeast Mississippi, 2014 alone has brought new job announcements totaling about 1,000, and that’s even taking into account the closure of the Lane Furniture plant in Saltillo. While nearly 500 jobs were lost there, industry leaders said other expansions and new companies would absorb those losses.

Also, unemployment in the region remains relatively tame, averaging 8.5 percent in the first quarter, compared to 10.3 percent for the same time a year ago.

On Friday, the consumer sentiment index from the University of Michigan and Thomson Reuters rose to 84.1, just one point lower than the 85.1 reached last July. That figure was the highest since 2007, right before the recession.

For so much uncertainty, there seems to be plenty of confidence. Interesting.

Contact Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com