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Major concern is staffing, not energy or immigration

San Diego, CA, (May 31, 2006) – Chief executives of small and mid-sized businesses say the overall U.S. economy continues to improve, but its torrid pace of growth will slow during the second half of 2006, according to the Vistage quarterly CEO survey, the Vistage Confidence Index.  With this positive economic outlook, CEOs still find hiring and retaining good people a more immediate concern than addressing rising energy costs or proposed immigration reform.

The Vistage Confidence Index fell to 97.8 in Q2, 2006, down nearly seven points from the vigorous 104.2 established in Q1.  More than 1,800 CEO members of Vistage International, the world's leading chief executive organization, responded to the Q2 survey.

“Firms anticipate the economy is slowing from its robust pace, but it will continue to remain positive,” said Richard Curtin, Ph.D., a consultant for the Vistage Confidence Index and director of consumer surveys at the University of Michigan.  “Overall, firms point to a continued economic expansion amid tight labor markets and heightened cost pressures.” 

"A nearly equal number of firms expect conditions to improve as to worsen in the next 12 months, in sharp contrast to a year ago when three times as many firms expected a faster, rather than a slower rate of economic growth,” said Dan Barnett, Chief Operating Officer of Vistage International.

Staffing Remains #1 Concern for CEOs

The hiring and retaining of qualified, trained employees continues to be the most pressing concern for American CEOs.  Although nearly six out of ten CEOs expect to hire additional employees in the next twelve months, on pace with the Index results from last year, a tighter labor market is causing CEOs to worry more about staffing than rising energy and capital costs.

Growth, Revenue and Profits

Although firms are less confident about the economy than one year ago, they remain positive about the growth of their business and 78 percent expect revenues to grow.  According to Barnett, “Business growth is driven by more than the strength of the U.S. economy.  Seventy percent of firms say they are conducting business outside the U.S., one reason why companies see healthy growth ahead.”

Energy

Rising energy prices are not the most significant issue among CEOs, with only nine percent listing it as such.  Thirty percent of businesses are absorbing the growing energy costs and another 27 percent are increasing prices to customers as a result of increased energy costs.

Avian Flu Fears

Concerns about an avian flu pandemic continue for CEOs, but the business implications have yet to affect their economic confidence. Seventy-three percent of CEOs are taking no action in response to the growing international concern.

Pending Legislation on Immigration Not an Issue

Despite the new emphasis on immigration reform in Congress, only eight percent of CEOs expected the reforms to have a major impact on their business.

Vistage Confidence Index Components

The Q2 2006 Vistage Confidence Index is a compilation of responses from 1,836 CEOs of small- to mid-sized companies, surveyed May 15-24, with a margin of error of 1.9 percentage points. The Vistage Confidence Index is the only comprehensive report of their opinions and projections.

The opinions of these business leaders provide a clear snapshot of current economic, market, and industry trends and demonstrate their plans for growth over the next 12 months. These insights provide a leading indicator for employment, capital expenditure, sales and revenue trends.

Vistage International and its affiliates have more than 12,000 members in 15 countries representing the world’s largest chief executive membership organisation based on revenue. Vistage members generate nearly $300 billion in annual revenue and have more than 2.1 million employees around the world. Vistage is dedicated to increasing the effectiveness and enhancing the lives of chief executives. Member companies are better run and grow their revenues, on average, at twice the percentage growth rate after joining Vistage.

Vistage affiliates include TEC, The Executive Committee and The Executive Connection in the following areas: Florida, Michigan, Wisconsin, Argentina, Australia, Canada, Brazil, Chile, Germany, Mexico, Malaysia, New Zealand, Singapore and South Africa. 

Media Contact

David Banyard
Business Development Leader
Vistage International (UK) Limited
+44 (0)1962 841188
david.banyard@vistage.co.uk