CPAs working in business and industry, including CFOs and other business executives polled in May by the American Institute of Certified Public Accountants (AICPA), believe the economy is improving. But their companies aren’t yet willing to hire more employees.
The AICPA’s Economic Outlook Survey showed that out of 1185 survey respondents, 49 percent were optimistic about the United States economy in the second quarter of 2013 compared with 32 percent who were optimistic during the first quarter of 2013. Additionally, the number of pessimists on the economy declined to 17 percent, which results “in a more balanced, if not enthusiastic, take on the economy,” according to the report.
Similarly, the economic optimism component of the AICPA’s CPA Outlook Index, a subset of the main sentiment index that tracks organization optimism, expansion, revenue, profits, employment, spending and training, rose to 66 in the second quarter of 2013 from 50 during the second quarter of this year. The 16-point jump is the highest quarter-to-quarter index component move. Year-to-date, it’s up by 12 points.
The overall CPA Outlook Index released along with the survey last week rose three points from 66 to 69 for the quarter, matching a post-recession high last reached in the first quarter of 2012. Generally an index reading considerably above 50 is considered to be positive.
But both the survey and the CPA Outlook Index revealed less bullish thoughts on hiring. Some 57 percent of those polled say their companies have the right number of employees. Twelve percent said they plan to hire soon, the same as last quarter. Similarly, the employment component of the CPA Outlook Index rose only 1 point to 62 from 61 last quarter.
When they do hire, CPAs in the construction and technology sectors expect to see the biggest job growth. In terms of annual revenues, CPA-holding executives at firms in the $1-billion-and-over category anticipate the biggest jump in hiring, with 15 percent saying they had too few employees and are planning to hire.
Among the 31 percent of CPAs who describe their companies as having too few employees, just 12 percent say they are planning to hire. Nineteen percent work at the firms needing workers are “hesitating to hire,” though that number fell below 20 percent for the first time since the first quarter of 2011.
But respondents expect their own company’s growth prospects to be high, as was the case in previous AICPA surveys. Of those surveyed, 57 percent were more optimistic about their company’s prospects in the second quarter, marking the highest level in this category since the first quarter of 2011. In comparison, 50 percent recorded rising optimism in the first quarter. The number of companies expecting their business to expand also increased this quarter to 62 percent from 58 percent last quarter.
“In addition to holding a more optimistic view of the economy, executives are feeling much better about their own business prospects,” said Arleen R. Thomas, the AICPA’s senior vice president for management accounting and global markets. “Some three out of five companies are now expecting to expand over the next 12 months.”
But smaller companies, according to the report, “are struggling more than average” when it comes to their liquidity and cash position. It notes that “18 percent of small businesses anticipate that obtaining credit will be more difficult in the next quarter. Only 3 percent of very large businesses feel that way.”