NEW YORK, June 7, 2006 (PRIMEZONE) -- CEOs of the nation's fastest-growing private companies are increasingly upbeat about the economy's prospects--and holding firm to their ambitious revenue targets and hiring plans for the next 12 months. But concerns about availability of skilled, trained workers and related wage pressures are on the rise--now greater than worry about escalating energy prices.
Optimism up, growth targets and hiring plans steady.
In the first quarter, 76 percent of fast-growth CEOs counted themselves optimistic about the domestic economy's prospects over the next 12 months, up from 71 percent at year-end. Optimism about the world economy also increased, to 73 percent from 68 percent.
In keeping with this sunny outlook, surveyed CEOs are holding firm to their revenue growth target of 22.2 percent for the coming year, with international markets playing an increasing role:
-- International sales are expected to account for 19.9 percent of
total revenues for the 44 percent selling abroad--up from 18.7
percent in the prior quarter.
-- Increased international sales were reported by 49 percent in
1Q06: only nine percent cited a decrease.
Also holding firm: 80 percent are again planning net job additions over the next 12 months. Overall, a composite workforce increase of 9.1 percent is expected, comparable to the prior quarter's estimate of 9.0 percent.
Those expecting to expand their workforce are forecasting 24.5 percent revenue growth, while those planning no additions foresee growth of only 12.9 percent.
"Increased optimism appears to signal that more of these CEOs believe in the staying-power of today's economy, both domestically and abroad," said Rich Calzaretta, national leader of PricewaterhouseCoopers' Private Company Services practice. "Holding firm to their growth targets and hiring plans is a reaffirmation of their confidence."
Mixed outlook for new investments.
But in this latest reading, only 41 percent of "Trendsetter" CEOs are planning major new investments in their business over the next 12 months, off from 46 percent projected in the preceding quarter. However, their level of expected spending is up, now estimated at 13.5 percent of revenues, from 12.6 percent in the prior quarter.
Those planning new investments expect to increase their company's revenue growth by 25.5 percent over the next 12 months, compared to 19.9 percent growth for those without new investment plans.
The three leading new investments expected are information technology (cited by 43 percent), sales promotion (40 percent), and new product development (38 percent).
The three leading growth categories are: sales promotion (40 percent, up from 34 percent in the prior quarter); advertising (33 percent, up from 28 percent); and geographic expansion (29 percent up from 25 percent).
"Those with plans for major new investments appear to be on a faster track," said Calzaretta. "And many seem inclined to fuel their expansion with increased marketing activity--both sales promotion and advertising."
Worker-related issues move to the front burner.
Nearly half of all CEOs (49 percent) now cite lack of qualified workers as a potential barrier to growth over the next 12 months, up from 43 percent in the prior quarter. A comparable number (48 percent) remains concerned about a potential lack of demand over the next 12 months, off from 50 percent.
Four other prospective growth blockers are also frequently mentioned, including:
-- Pressure for increased wages, cited by 38 percent (up from 32
percent);
-- Escalating energy prices, unchanged at 33 percent;
-- Higher interest rates, 29 percent (up from 27 percent); and
-- Legislative/regulatory pressures, 28 percent (off from 32
percent).
"It is noteworthy that as worry about rising energy prices took pause, greater and faster-growing concerns emerged about availability of skilled, trained workers and pressure for increased wages," said Calzaretta. "Inflationary implications of this new turn of events will bear close scrutiny, going forward."
PricewaterhouseCoopers' Trendsetter Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
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