Finance decision-makers less confident in third quarter

Finance decision-makers less confident in third quarter

Finance decision-makers at businesses remain confident overall in their own organizations and in the domestic economy, but overall economic sentiment dropped for the third quarter in a row, according to a new survey. 

The decline, though small, represents a different mood than a year ago, when the outlook was improving for their companies. The third-quarter Business & Industry Economic Outlook Survey, released Thursday by the AICPA, shows overall business expansion plans, as well as revenue and profit projections, down from the third quarter of 2014.

Survey results help to form the CPA Outlook Index (CPAOI), a measure of nine equally weighted components. The CPAOI is 71, four points lower than a year ago and seven points off the post-recession high reached in the fourth quarter of 2014. An index rating above 50 indicates a positive outlook.

In the third quarter of 2014, 55% of all businesses expected to expand some, and 13% expected to expand a lot in the following 12 months. This year, however, 50% expect to expand some in the next year, and 10% expect to expand a lot. A year ago, 31% expected to contract a little or remain the same. This year, 37% expect to contract a little or stay the same.

Large businesses are the least likely to expect to grow, with 56% of those with revenues exceeding $1 billion predicting expansion in the next year. That’s down from 71% in the third quarter of 2014. Midsize businesses are also less likely to project expansion. The smallest businesses—those with revenues of less than $10 million—are expected to expand more compared with a year ago (61% vs. 59%). Read more on the Journal of Accountancy.