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Middle-Market CEOs Remained Optimistic About Business in the Second Quarter, Finds Marcum CEO Survey

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New York City, NY - CEOs of the nation’s middle-market companies remained solidly optimistic about the general business environment in the second quarter, according to a survey by Marcum LLP, a national accounting and advisory firm. However, the percentage of CEOs with a negative outlook more than tripled during the period.

An overwhelming majority of 96.51% of CEOs rated their business outlook neutral to positive in the Marcum CEO Survey for the second quarter of 2018. This represents a marginal decline from 99.17% in the first quarter. There was a corresponding increase in CEOs expressing a negative outlook on business, which up-ticked to 3.49% in the second quarter, from less than 1 percent (0.83) in the prior period.

The survey’s reading on CEO optimism for the second quarter translates to a weighted average of 7.41, down from 7.77 in the first quarter.

“CEOs maintained a highly positive outlook on the business environment for their companies and their industries overall during the second quarter. However, we saw declines in the upper registers of the rating scale, in the 7 to 10 range, which suggests that CEOs were somewhat less positive in the second quarter than in the first. Interestingly, there was also a diversity of opinion among CEOs, even within the same industries, with some assessing their business outlook at the highest rating and others selecting the lowest. This will be something to keep our eyes on in the next two quarters and beyond,” said Jeffrey M. Weiner, Marcum’s chairman and chief executive officer.

The Marcum CEO Survey is a quarterly gauge of middle-market CEOs’ outlook of the current business environment and their priorities for the next 12 months. It is a companion to Chief Executive Group’s monthly CEO Confidence Index, America’s largest monthly survey of chief executives.

CEO Priorities

Talent recruitment remained the top priority for CEOs in 11 industry categories; more than a third of respondents (36%) again made this selection.

Workforce training overtook technology as the No. 2 priority for the majority of CEOs, increasing from 19.91% of respondents in the first quarter to 22% in the second. R&D dropped by nearly half as a percentage of respondents who chose it as their No. 2 priority (8% v. 14%).

Equipment, geographic expansion, R&D, and physical plant expansion gained ground as a No. 3 priority in the second quarter. Physical plant expansion doubled its importance in CEOs’ future plans (8% v. 4%).

Most Important Influence

Availability of talent remained the top influence for business planning in the next 12 months, although the percentage of CEOs selecting this answer dropped to 29% from 31%.

Labor, industry consolidation, legislation and reform, and “other” all increased as key influences in the second quarter.

Product & Service Diversification

CEOs giving the importance of product/service diversification the top rating of 10 increased two percentage points, to 18% from 16% in the first quarter. Gains were also seen in the lower ranges of the rating scale, with a significant jump in the number of respondents who said diversification is not important to their future (15.97% v 9.70%).

CEO Insights

A number of CEOs provided additional insights in optional open-ended comments. The comments elaborated on the reasons for their rating choices.

Selected comments:

  • “Talent acquisition is our single biggest constraint.” - Arthur Didge, Ecore International Inc.
  • “It takes years to train people in our business.” - Anonymous
  • “Finding skilled workers is extremely difficult with such low unemployment. We need to explore technological solutions to improve our processes and reduce reliance on labor.” - Anonymous
  • “Businesses with no UX [user experience] strategy will simply not survive in [the] future.” - Dereck du Toit, Interaction Design Foundation

A total of 315 CEOs completed the Marcum CEO Survey for the second quarter of 2018. Of those providing revenue information, 280 participating companies (89.46%) had revenues of up to $1 billion in 2017; 33 companies (10.54%) had revenues in excess of $1 billion.

Participating industries included:

  • Advertising/Marketing/PR/Media/Entertainment
  • Construction/Engineering/Mining
  • Energy/Utility
  • Financial Services (Banking, Insurance, Brokerage, Investment)
  • Government and Non-Profit
  • Health Care (Providers and Payers)
  • High Tech/Telecommunications/Information Technology
  • Manufacturing (Consumer Goods)
  • Manufacturing (Industrial Goods)
  • Pharmaceuticals & Medical Products
  • Professional Services (Legal, Consulting, Accounting, Architecture)
  • Real Estate
  • Retail Trade
  • Transportation (Airlines, Trucking, Rail, Shipping, Logistics)
  • Travel and Leisure (Hotels)
  • Wholesale Distribution
  • Other

 
Related
Jeffrey Weiner, Chairman & Chief Executive Officer, Marcum LLP

Chairman & Chief Executive Officer
Marcum LLP
New York, NY
 




 
 
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