Fifty-two percent of CFOs view the current North American economy as good or very good, a decline from 64% in Q1.
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Meanwhile, 9% and 12% of CFOs consider current economic conditions in Europe and China as good or very good, down from 31% and 29%, respectively.
Each quarter, Deloitte CFO Signals tracks the thinking and actions of leading CFOs representing North America's largest and most influential companies.
Looking a year out 18% of finance leaders indicate that conditions in North America will improve, a drop from 36% last quarter. The downward trend in CFOs' assessments continued for other regional economies. Just 7% of CFOs believe Europe's economy will be better in a year, down from 26% in 1Q22, and 19% expect China's economy to improve, compared to 31% in the prior quarter.
The number of CFOs who viewed their own company's prospects as being better compared to the three months before the survey declined to 27% from 38% in Q1. Expectations for earnings growth decreased to 8.4% from 9.2% in Q1. Revenue growth expectations also dipped, to 7.8% from 9.1%. Capital investment growth expectations decreased to 11.2% from 11.3%, while expectations for domestic hiring remained flat at 5.3%.
However, CFOs did raise their growth expectations for dividends and domestic wages. Expectations for dividends rose slightly to 4% from 3.9% in the first quarter of 2022, while domestic wage expectations increased slightly to 5.3% from 5%.
Regarding risk-taking, just over one-third (35%) of CFOs indicate that now is a good time to take greater risks, down from 47% in Q1.
Amid a tumultuous period for public equities, a smaller proportion (43%) of CFOs consider U.S. equity markets to be overvalued, compared to 72% in Q1. Additionally, just 32% percent of CFOs considered debt financing attractive, a significant drop from last quarter's 85%. Twenty-two percent of CFOs regard equity financing as attractive, compared to 37% in 1Q22.
Externally, CFOs indicated that macroeconomic issues, including inflation and geopolitics, were among their top worries in Q2. The Russia-Ukraine war and its impact on supply chains weigh heavily on CFOs' minds.
Internally, talent remained the top concern for CFOs, followed closely by strategy execution. CFOs are acutely concerned with retention and wage inflation, among other areas related to talent.
Nearly three-quarters (73%) of CFOs indicated that they are involved or very involved in their organizations' decarbonization efforts as a strategist. Just more than 1 in 4 (27%) CFOs indicate that their organizations would reach net-zero emissions by 2030, with an additional 34% saying their organizations would reach it by 2050.
CFOs expect to incur the most significant costs related to their organizations' decarbonization goals in increased operating and capital expenditures, and in transforming their organizations' overall business. model and value chain. To fund decarbonization efforts, 69% of CFOs said they use internal cashflows from operational savings, while more than one-third (37%) said they reallocate growth capital from carbon-heavy resources, assets, businesses or product lines. ■