WEST CHESTER, Pa. (1/22/14)--Business optimism reached an all-time high for the week ending Jan. 17, according to an 11-year-old survey conducted by Moody's.
Growth in firms' expectations for the next six months was up to record levels, the weekly report released Tuesday revealed (Economy.com Jan. 21). A net 65% of survey respondents expect business conditions to improve over the next half-year--up from 63.3 the prior week. An assessment of present conditions was also up slightly, to 42.3 from 41.4.
More than half of the responses to the nine questions in the survey were positive, which, Moody's said, was a record number, eclipsing the average proportion of roughly one-third.
Overall business confidence around the world fell slightly, to 39 from 39.3. Confidence among U.S. firms was measured at 45%. Four-week moving averages of confidence around the world and in the U.S. were at 38% and 43%, respectively.
Moody's attributed the robust confidence to record stock market performance and the apparent end of fiscal uncertainty in Washington for the next two years. Businesses reported regulatory and legal issues being their utmost concern, with up to 40% of the survey's respondents citing the worry as their foremost.
Bloomberg said that receding fears of a sudden downturn and the need to invest in capital goods is driving the improvement in mood (Bloomberg.com Jan. 19). It cited an index of bonds which showed increased demand in 2013 for securities issued by high-risk Eurozone governments such as Greece, Spain, Ireland, Italy and Portugal.
The research and news firm did warn that slack demand could see confidence tumbling soon. Andrew Lapthorne, head of quantitative strategy for Societe Generale in London, told Bloomberg that capital expenditures have outpaced revenues for three years, and that both total debt and investment levels, at 7% of total sales, are higher than before the financial crisis.
Just less than half of the survey's respondents, however, said they plan on hiring, with "a very small percentage" reducing staff.
Real estate firms were feeling most positive, with manufacturers recording the relatively gloomiest outlook.
The all-time low of the Moody's confidence measure was negative 44%, in late December 2008, while its previous peak was close to 41% in early March 2011.