Continuing uncertainty about the global economy and possible United States measures to deal with its budget deficit saw North American CFOs less optimistic in the fourth quarter of 2012, according to a Deloitte survey of 86 CFOs.
The decline was particularly large in Canada where net optimism (the difference between the percentage of CFOs expressing rising and falling optimism) fell from +47 in the third quarter of 2012 to negative six in the fourth, while U.S. CFOs reported their net optimism fell from -16 last quarter to -21 this quarter.
As a result, companies in both countries have lowered growth expectations for capital investment, research and development, and marketing and advertising spending, and don't expect much growth in domestic hiring, found the quarterly Deloitte CFO Signals Survey.
"Canadian companies appear to be increasingly concerned about a negative impact on their operations caused by ongoing economic problems in the United States and Europe," said Trevor Nakka, co-leader of Deloitte Canada's CFO program. "This is leading many of them to take steps to preserve cash and protect revenues from existing markets rather than investing and expanding."
Domestic hiring expectations have fallen considerably among Canadian CFOs, dropping to just 0.2 per cent in the fourth quarter, down from 1.1 per cent in the third quarter and 3.7 per cent in the first.
U.S. hiring expectations recovered slightly to 0.7 per cent from 0.2 per cent last quarter, found the survey, but are still below 1.9 per cent in the second quarter and 1.8 per cent in the first.
"Unlike in previous quarters, when companies had relatively high expectations for hiring and capital expenditures, we now see them pulling back on investments as they await greater certainty about what is going to happen in the United States and Europe," said Dick Cooper, co-leader of Deloitte Canada's CFO program. "It's no surprise that a lack of clarity on fiscal policy is one of the top challenges facing North American businesses."
As for career concerns, improving finance's ability to be a business partner is a constant struggle for CFOs, said Deloitte. To better serve their business units, CFOs said they most want to improve finance's capabilities around strategic planning (52 per cent), IT/information management (48 per cent) and budgeting and financial planning (47 per cent).
Major change initiatives, changing regulatory requirements and strategic ambiguity are the three biggest job stresses for CFOs, while board relationships and demands appear to be a growing source of stress.
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