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Analysis

CFO Signals™: 2018 Q3

Fading optimism, led by trade, tariffs, and talent concerns

This quarter, CFO optimism, while still strong, appears to be on the retreat, amid concerns around global trade and the evolving challenge to both identify finance talent and equip teams with the analytical skills they need.

CFOs' assessments of the economy in Q3

At the start of the year, CFO optimism hit a new survey high in the wake of tax reform and continuing positive global economic news—several growth metrics also reached multi-year highs. Last quarter, optimism tapered a bit, but expectations for revenues, earnings, and hiring rose again.

This quarter, however, CFO optimism while still strong appears to be on the retreat amid concerns around global trade and interest rates, combined with the evolving challenge to both identify finance talent and equip teams with the analytical skills they need.

Their assessments of the current North American economy declined slightly this quarter—from 94 percent to 89 percent—but perceptions of conditions in both Europe and China declined markedly (although they still remain higher than their two-year averages). In addition, expectations for economic strength in a year were below the two-year average in each region. Own-company optimism also fell for the second straight quarter and now sits below its two-year average.

In fact, net optimism fell to +36 from +39, reaching its lowest level since 3Q17. In addition, there was a spike in CFOs’ views that the equities markets are overvalued, with 71 percent of surveyed finance chiefs saying the markets are too high-up from last quarter’s 63 percent (but still below the above-80 percent levels of late 2017).

While trade policy is the top external concern with CFOs increasingly citing the possibility of additional tariffs and escalating trade tensions as having negative effects on corporate performance, finance talent continued to be the top constraining internal risk. To address the evolving talent requirements, CFOs indicated an intention to shift the composition and locale of the workforce, including increased utilization of outsourced, contingent, or gig workers, and higher utilization of shared services or offshore personnel over the next three years. A majority of CFOs cited analytical skills, digital technologies/automation, and core business skills as the most important skills an organization needs to develop/further develop to effectively deliver finance in three years.

Download the report to read the details or the executive summary to view the highlights

2018 Q3 North American CFO Signals™ highlights

Business outlook highlights

About Deloitte LLP's CFO Signals™ survey

CFO Signals™ is about CFO issues. This quarterly survey tracks the thinking and actions of leading CFOs—representing North America’s largest and most influential companies—across four predominant areas: business environment, company priorities and expectations, finance priorities, personal priorities.

Learn more about Deloitte's CFO Signals™ survey.

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