Most chief financial officers in the U.S. report improved access to capital, low to moderate economic growth and healthier hiring, according to a quarterly survey of CFOs across seven major industries.

Middle-market companies in the United States believe the worst of the economic crisis is behind them and expect to grow over the next few years, according to a quarterly survey of chief financial officers (CFOs) operating across seven major industries.

In GE Capital’s third-quarter 2010 survey of CFOs, 84 percent of respondents said they expect the nation’s economy to improve (37 percent) or remain stable (47 percent) over the near term. While CFOs are maintaining a cautious tone, respondents expect little chance for a double-dip recession in the months ahead.

“CFOs at middle-market companies, which are a significant engine for economic growth in America, believe the recovery will continue, if at a slower pace,” Dan Henson, president and CEO of GE Capital, Americas, said in an announcement of the findings.

The survey polled 530 CFOs of companies with revenues ranging from $50 million to $1 billion, operating across seven major industries: metals, mining and metals fabrication; food, beverage and agriculture; general manufacturing; health care; retail; technology and business services; and transportation.

CFOs in all seven industries were decidedly more positive about the current state of their field than they were in January. Executives in the food industry expressed the highest level of positive sentiment, followed by those in technology, metals, health care and retail, the latter two sharing the same level of positivity.

Looking forward, 86 percent of the respondents expect low to moderate growth for their businesses over the next few years. Tech companies are the most optimistic, with 59 percent expecting moderate or better growth in the next few years, followed by metals (50 percent) and general manufacturing companies (45 percent).

“Many companies that had been sitting on the fence before moving ahead on a major transaction, because of uncertainties in the economy and in credit markets, are now moving forward,” according to Henson.

The 12-month outlook for capital expenditures is up. In the third quarter, 33 percent of respondents said they expect higher spending ahead, up from 28 percent in January. Technology executives are the most optimistic (38 percent forecast higher spending), while food industry CFOs are the least optimistic (27 percent forecast higher spending).

Despite some optimism about their own industries and the future, CFOs remain concerned about the current business environment. While CFOs’ view of the U.S. economy’s general health improved slightly since January, their assessment remains somewhat weaker than that of the broader global business community.

Credit is still tight for small firms, and many continue hoarding cash. According to a separate survey of CFOs by Duke University and CFO magazine in September, CFOs worldwide say earnings growth and capital spending will falter within six to 12 months if the economy doesn’t improve.

For medium-sized firms, however, credit market conditions are generally improving, according to GE Capital’s findings. Approximately 85 percent of CFOs surveyed expect the amount of credit available to them in their next round of financing to improve (29 percent) or remain the same (56 percent). A larger share (75 percent, up from 60 percent in January) expects their company’s cost of capital to improve or remain stable this year.

“Middle-market CFOs are generally more comfortable with their access to credit today,” Henson said. “There’s more liquidity in the lending markets now, so it’s a better time to be borrowing.”

The third-quarter results align with the U.S. Department of Labor’s October jobs data, which showed employment rising for the first time in five months, a sign that businesses may be starting to gain confidence in their growth prospects.

According to GE Capital’s findings, 62 percent of CFOs surveyed said they had begun hiring in 2010, with 56 percent expecting to continue adding jobs through the remainder of the year. The majority of CFOs (77 percent) expect operational positions to make up the greatest percent of new hires. Transportation CFOs who expect to hire led the average in anticipated growth, projecting 11 percent workforce growth this year. Overall, CFOs who indicated they would be hiring expect to increase their workforce by an average of 7 percent.

“Although economic recovery will be slow, these findings are a positive reinforcement that the worst appears to be behind us,” Henson continued. “We do expect the trend of ‘smarter borrowing’ and highly strategic spending to continue, but workforce growth is a positive indicator of things to come.”

Resources

America’s Mid-Market Companies See Continuing Economic Recovery
GE Capital Survey, Nov. 18, 2010

Global CFO Survey: CFO Optimism Tumbles, Employment Outlook Bleak
Duke University and CFO Magazine, Sept. 15, 2010

The Employment Situation – October 2010
U.S. Department of Labor, Nov. 5, 2010

U.S. Economy: Payrolls Increase for First Time in Five Months
by Shobhana Chandra
Bloomberg News, Nov. 5, 2010