U.S. Business Optimism Rises as Greek Outlook Nosedives

While optimism for the nation’s economic outlook among U.S. business leaders rose in second quarter 2015, optimism among Greek business leaders plummeted to its lowest level since fourth quarter 2012. This is according to the latest data from the Grant Thornton International Business Report (IBR), a survey of more than 2,500 business leaders in 36 countries.

In second quarter 2015, optimism for the economic outlook among U.S. business leaders rose 11 percentage points to net 54 percent. Eurozone confidence spiked to net 54 percent, a significant increase from net 34 percent last quarter. Confidence in the European Union increased to net 58 percent, a 20 percentage-point increase from last quarter, and well above pre-crisis highs. Although optimism is up in the European Union, confidence among Greek business leaders dropped significantly. There, optimism plummeted to net -38 percent, down 44 percentage points from last quarter.

Confidence in China, the world’s second largest economy, increased to net 46 percent, up 12 percentage points from the previous quarter. Optimism among Brazilian business leaders dropped 6 percentage points to net -24 percent, marking the fifth consecutive quarter of decreased optimism. Globally, net 45 percent of businesses are optimistic, up 12 percentage points from the previous quarter. The most ambitious businesses are in Germany (net 92 percent), Ireland (net 90 percent), New Zealand (net 86 percent) and India (net 85 percent).

“With optimism among U.S. business leaders on the rise, and so many other large economies reporting increased confidence, the global economy seems to be headed in the right direction,” said Stephen Chipman, senior vice chair at Grant Thornton LLP. “Less encouraging, however, is that, though business confidence seems to have recovered, business leaders around the world are still seemingly hesitant to make long-term investment decisions.”

Globally, investment expectations remain weak. In second quarter 2015, global companies’ plans to invest in research and development dropped 5 percentage points to net 26 percent. Companies’ plans to invest in new buildings in the next 12 months dropped slightly to net 19 percent, down 3 percentage points from last quarter, while plans to invest in plants and machinery decreased 5 percentage points to net 27 percent. In the United States, companies’ plans to invest in research and development dropped 5 percentage points to net 32 percent, following a stagnate six-month period at net 37 percent. Companies’ plans to invest in new buildings in the next 12 months increased to net 26 percent, up just 3 percentage points from last quarter, while plans to invest in plants and machinery decreased 4 percentage points to net 20 percent.

Although optimism among U.S. business leaders has risen, sentiment about other areas of U.S. business performance and stability remains relatively unchanged. U.S. profitability expectations decreased 3 percentage points to net 65 percent, while revenue expectations decreased slightly to net 70 percent, down just 1 percentage point from last quarter. IBR data also reveals that U.S. hiring expectations remained relatively high at net 48 percent, down just 8 percentage points from last quarter. Pay raise expectations improved just 2 percentage points to net 10 percent of U.S. business leaders expecting to offer employees an above inflation pay raise in the next 12 months.

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