2018 Q1 Global CFO Signals™

Vital signs strong—again

In the 22 surveys included in this quarterly round-up, many of the responding CFO outlooks can best be described as good to excellent—at least for now.

How does CFO sentiment in Q1 2018 break down?

A synopsis by region:

  • Argentina: Growing concerns due to government actions
  • Austria: Optimism among the highest in Europe
  • Belgium: Protectionist threats weigh on CFO sentiment
  • China: Sentiment reflects an upbeat recovery outlook
  • Denmark: Optimism makes space for digital transformation
  • Finland: Riding high on the business cycle
  • France: Capitalizing on a confident future
  • Germany: Top investment target: Germany
  • Greece: Optimistic, but less enthusiastically
  • Iceland: Less optimistic toward economic growth
  • Ireland: As uncertainty drops, CFOs go on the offensive
  • Italy: Consolidated optimism amid higher uncertainty
  • Japan: Optimism retreats as trade war rhetoric escalates
  • Netherlands: Focused on the positive—and the possibilities
  • North America: Sentiment swells in the wake of US tax and spending bills
  • Norway: On the offense
  • Portugal: Optimism still high
  • Spain: Improved expectations and increased risk appetite
  • Sweden: Increasing optimism, but momentum is slowing
  • Switzerland: A mini-boom, negative interest rates, and skills shortages
  • Turkey: Facing geopolitical uncertainties at home and abroad
  • United Kingdom: Transition deal boosts sentiment

Vital signs strong—again

Strong CFO optimism. Check. Solid revenue expectations. Check. Positive outlook on regional economies. Check. Expansionary strategies. Check.

By many accounts, the patient—in this case, the current global economy as viewed by CFOs—seems to be in pretty good shape. And with vital signs continuing to be strong in many of the 22 surveys reporting in this edition of Global CFO Signals, CFO outlooks can best be described as good to excellent—at least for now.

The positive sentiment is particularly pronounced in North America. There the net optimism index rose from last quarter’s +47 to +54 this quarter—a new survey high. Nearly 60% of CFOs express rising optimism (up from 52%), and just 6% express declining optimism. Moreover, their optimism is bolstering expectations for revenue growth (5.9%, up from 4.7%—a two-year high), earnings growth (9.8%, up from 8.4%—highest in nearly three years), and capital expenditure (11.0%, up from from 6.5% —a five-year high).

Meanwhile, in many of the 18 European countries included in this report, the optimism that has taken hold the last couple of quarters has consolidated into almost a “new normal,” observes Michela Coppola, who leads Deloitte’s European CFO Survey. In fact, net optimism weighs in at a net +33 among the countries reporting, and is positive except in the UK and Iceland. Coupled with tempered perceptions of uncertainty, a pick-up in capital spending in countries, such as France (+65) and Ireland (+60), as well as intentions to hire, particularly in the Eurozone, CFOs have a solid comfort level to plan for the future. What gives them even more comfort is that according to the latest IMF Global Economic Outlook (April 2018) economic growth in advanced economies will further strengthen in 2018, reflecting, in particular, the spillover effects of an expansionary fiscal policy in the United States.

That spillover may eventually be fueled by business and consumer spending tied to recent US tax reform. But at this point, it is too early to tell since such investment has not shown up in the economic indicators.

– Patricia Buckley, Managing Director, Economic Policy and Analysis, Deloitte Services LP (US)

In the meantime, there remain pockets of discord. In Asia, for example, optimism is more mixed and highly dependent on politics. Consider that the percentage of Japanese CFOs who reported feeling “less optimistic” or “very unoptimistic” grew from 8% last quarter to 22% this quarter—a trend driven by everything from a decline in confidence in the Abe government to a strong yen to apprehension about protectionist trade policies. Similarly, in China, “detrimental government policy/regulations” ranks as the largest risk factor among China’s CFOs, even as net optimism turns positive in that country. Meanwhile in the UK, Brexit still weighs heavily, just a little less so: CFOs now rate Brexit as the second top risk facing their businesses, just behind slower UK growth.

Still, despite political overhangs, many CFOs share the intention to grow and take on more risk. In North America, CFOs indicate a strong bias toward revenue growth over cost reduction (64% versus 18%) and investing cash over returning it (57% versus 14%). In 11 of the European countries reporting, CFOs included more expansionary strategies than defensive ones among their top strategies. And 13 of them report an uptick in risk appetite compared with Q3 2017, particularly in France, Spain, and Sweden.

The main drag on all these plans, however, continues to be a lack of skilled talent. In more than half the European countries surveyed, CFOs identified a shortage of skilled labor as a significant risk. North American CFOs’ focus on talent acquisition, quality, and retention further has only intensified this quarter. In Japan, the top domestic risk was labor shortage, cited by 61% of respondents. And, surprisingly, in the German survey, “labor shortages turned out to be more worrisome than international policies risks to CFOs,” says Alexander Boersch, chief economist for Deloitte Germany.

2018 Q1 CFO sentiment synopsis by region


As mentioned previously, many of the indicators in the North American report hit new survey highs. There was one very clear driver: passage of tax reform by the US Congress. In its wake, CFOs not only grew more optimistic, but their assessments of the North American economy grew even stronger, with nearly 90% of CFOs rating current conditions as good, up from 74% last quarter and a new survey high by a wide margin. CFOs also commented on tax reform head-on, expecting it to have wide-ranging implications.

“Tax reform was intended to increase companies’ domestic investment, hiring, and pay, and CFOs’ survey responses seem to indicate it will aid all of these to a very substantial extent,” observed Greg Dickinson, managing director, Deloitte LLP, who leads the North American CFO Signals survey.


There are mixed outlooks among the two countries reporting in Asia-Pacific: China and Japan. Japanese CFOs, for example, are somewhat gloomy about their companies’ financial prospects, with only 19% reporting being “very optimistic” or “more optimistic,” versus 27% in Q4 2017. On the other hand, net optimism rose significantly to +5 in China this survey from –23 in Q1 2017, reflecting a stable-to-positive outlook in that economy. With the International Monetary Fund raising the forecast for China’s economic growth at the beginning of 2018, there was an understandable upsurge in optimism among respondents amid a growing bullish market outlook.


Finally, as reported here and in the latest European CFO Survey, companies across Europe continue to signal solid optimism—albeit tempered from Q3 2017—about their business prospects. It should be noted that CFOs within the euro area showed a higher level of confidence than those outside. This is despite a series of disappointing economic data for the euro area in the past few months, indicating that although the economic recovery may have lost some momentum, a tipping point in CFO sentiment has not yet been reached. Interestingly, the only countries within the euro area where there was an increase in the net balance of optimistic CFOs are in the “periphery economies” of Ireland, Italy, and Spain—suggesting that the recovery in the euro area may have really established itself. Outside the euro area, the main outlier continues to be the United Kingdom, where a softening economic outlook and uncertainties related to Brexit may explain the expectations of CFOs.

Despite all the positive signals, there are still plenty of headwinds, including the possibility of higher deficits and inflation in the US in the wake of tax reform—which would not be a welcome spillover. “We’re expecting stronger growth this year and next year, but the big question is what happens two years from now,” says Buckley, adding that by then, CFOs might want to “dust off those recession plans just in case.” That thought may be enough to make the patient’s heart skip a beat.

Global CFO Signals: By the numbers

Risk appetite

In line with improved optimism, the number of European CFOs willing to take more risk on to their balance sheet has risen in the last six months, particularly in France, Spain, and Sweden. Still, overall risk appetite in Europe is negative, with the biggest decline seen in the UK (-72), Turkey (-69) and Iceland (-62). In North America, however, 69% percent of CFOs say now is a good time to take greater risk—up from 63% and a new survey high.


Uncertainty has tempered in many countries, but not everywhere. The gap between European CFOs inside the eurozone and outside who consider the current level of external financial and economic uncertainty to be high, continues to widen. Within the euro area, Italy is a notable exception (net +53) partly due to an inconclusive national election in March. Outside, UK CFOs report the highest level (net +86). In China, economic uncertainty remains the most high-impact risk factor, while in Japan, 70% report a high level of uncertainty partly due to the strong yen.


Expectations for certain metrics remain solid. In North America, revenue growth expectations rose from 4.7% to 5.9% (two-year high) and earnings growth from 8.4% to 9.8% (highest in nearly three years). Many Japanese CFOs expect future earnings to rise (64%), despite concerns about the cost of raw materials. And European CFOs expectations mirror their positive outlook: CFOs in the Netherlands and Germany are particularly confident about revenue growth, while expectations of higher margins showed the biggest increase in Greece, Spain and Portugal.


Hiring is on the upswing—provided you can find the right people to hire. The employment outlook is positive among European CFOs (except for the UK), but a tightening labor market means companies need to prepare for fierce competition for talent. Of the 18 European countries reporting, 10 report a skills shortage as one of their top concerns. In North America, many CFOs expect tax reform to raise hiring and wages, but also cite a talent shortage as a worrisome risks. Likewise, a labor shortage is a top concern for Japanese CFOs (61%).

Corporate strategy

Expansion is on the agenda. Eleven European countries reported more expansionary strategies than defensive ones among their top three strategies, with organic growth favored as the top (expansionary) strategy. Home markets are also being favored. In fact, some 63% of Germany’s CFOs plan to significantly increase investments in Germany, 21% in China and the US, respectively. Meanwhile, in North America, approximately 64% of CFOs say they are biased toward revenue growth (among the highest levels in survey history), and only 18% claim a bias toward cost reduction.


Funding is available—and cheap—for now. In North America, 77% percent of CFOs say debt financing is attractive, down from last quarter’s 85%. Attractiveness of equity financing decreased for public companies (from 46% to 43%) and especially for private companies (from 47% to 35%). In China, with the expected interest rate hikes from the US Federal Reserve, a growing number of respondents (15%) are worried about capital availability and cost. In Argentina, that worry may be why only 22% of CFOs will not seek financing in the next year. But across Europe, interest rate hikes seem to be being taken in stride with only one country (Iceland) naming hikes as a top concern.

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To access previous Global CFO Signals reports, please visit the Global CFO Signals library page.

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