Optimism about the US economy continues to grow among CPAs and financial executives, and with that, more companies are expecting to increase hiring in the near future, according to results of a new survey released by the American Institute of CPAs (AICPA) on Thursday.
While more than half (51 percent) of the 1,100 respondents believe their companies or organizations have the right amount of employees, nearly one in five (20 percent) businesses expect to hire new staffers in the coming year, the AICPA noted in its third quarter 2014 Business and Industry US Economic Outlook Survey. This is up from 17 percent last quarter and 13 percent at the end of 2013.
The percentage of companies reluctant to hire decreased two points, from 20 percent in the second quarter to 18 percent in the third quarter.
The survey, which is released by the AICPA each quarter, tracks hiring and business-related expectations for the next 12 months. For the third-quarter study, the AICPA polled CEOs, CFOs, controllers, and other CPAs in US companies who hold executive and senior management accounting roles.
However, one hiring dilemma continues: Many respondents felt that finding the right job candidates with the right skills remains difficult. For the second-straight quarter, “availability of skilled personnel” was cited as the No. 3 top challenge for businesses. The No. 1 challenge for the third quarter was “regulatory requirements/changes;” No. 2 was “domestic economic conditions.”
“AICPA’s survey results echo a key concern for businesses, which is the mismatch between open staff positions and the pool of qualified candidates available to fill them,” Valerie Rainey, CPA, CGMA, vice chair of the AICPA’s Business and Industry Executive Committee, said in a written statement.
Rainey, who is also CFO and senior vice president of corporate development and finance for Parsippany, New Jersey-based INTTRA, a leading multicarrier e-commerce network for ocean shipping, added that the results may explain why the survey’s findings show an uptick in plans for spending on training and other workforce investments.
Economic Optimism Trends Upward
The number of CPAs and financial executives optimistic about the US economy improved another point to 52 percent, after passing the 50 percent mark in the second quarter for the first time since the recession. In early 2009, at the height of the economic downturn, the level of optimism stood at just 5 percent.
The number of companies optimistic about their own prospects improved from 61 percent in the second quarter of 2014 to 65 percent in the third quarter, while 68 percent have plans for expansion in the third quarter, up from 64 percent.
Another indicator the economy is heading in the right direction is that the CPA Outlook Index – a comprehensive gauge of executive sentiment within the AICPA survey – rose two points in the third quarter to 74, a post-recession high. The index is a composite of nine, equally weighted survey measures set on a scale of zero to 100, with 50 considered neutral and greater numbers signifying positive sentiment.
Every category of the index rose both quarter over quarter and year over year, according to the survey. The largest increases in the past quarter had to do with three key performance indicators (KPIs) – expected profit, revenue, and employment growth, which all rose five points.
Professional, scientific, and technical services topped the charts in terms of the most optimistic sector this quarter with 76 percent of its respondents being positive about the prospects for their own organization. This optimism is also supported by plans for increased headcount of 4 percent over the coming year, up from a 2.6 percent projected increase last quarter.
Technology fell off sharply in terms of optimism – from 72 percent last quarter to only 58 percent in the third quarter. Optimism in both the retail (67 percent) and wholesale (61 percent) trade sectors both improved in the third quarter, while real estate (70 percent), construction (69 percent), and finance and insurance (61 percent) showed minor fluctuations.
Expectations for increased revenues improved from 3.8 percent in the second quarter to 4.4 percent in the third quarter. Projections for higher profits rose from 2.9 percent to 3.6 percent, and expectations for increasing headcount improved from 1.3 percent last quarter to 1.8 percent in the third quarter. Each of these KPIs reached levels not seen since the end of 2007.
The projected salary and benefit cost increase for the upcoming 12 months rose from 2.1 percent to 2.4 percent. Expectations for increased healthcare costs also rebounded to 6.6 percent after declining slightly from the first quarter to the second quarter, according to the survey.
About the survey:
The third quarter 2014 AICPA Business and Industry US Economic Outlook Survey was conducted from Aug. 6 to 26 and included 1,100 qualified responses from CPAs who hold leadership positions, such as CFO or controller, in their companies. The overall margin of error is less than 3 percentage points.