SMB CEOs appear optimistic about 2024’s economic outlook
23% of SMB CEOs anticipate handing out smaller pay raises than they did in 2023, and 4% don’t plan to give any raises this year.
More than half of CEOs at small and midsize businesses (SMBs) plan to increase hiring in 2024, and almost three-quarters intend to maintain or increase employee pay. On the other hand, 23% anticipate handing out smaller pay raises than they did in 2023, and 4% don’t plan to give any raises this year.
Those are some of the big takeaways from the latest “CEO Confidence Index” recently published for the fourth quarter of 2023 by the CEO coaching and peer advisory organization Vistage. The company has measured SMB CEOs’ sentiment on a variety of economic and business factors each quarter since 2003.
An increasing number of CEOs are projecting increased revenues and profits this year, and their level of economic optimism is on the rise despite economic confidence remaining historically low. Meanwhile, according to the index, talent acquisition and retention remains CEOs’ greatest challenge.
“CEOs, eager for growth akin to passengers awaiting takeoff, saw a slight uptick in confidence in Q4 2023,” Joe Galvin, Vistage’s chief research officer, said in a statement. “While unemployment stays low and 56% of leaders plan to expand their workforce in 2024, hiring and retaining talent remain top challenges. CEOs anticipate a talent surge when workforce velocity accelerates, emphasizing the need to fill every ‘seat’ in their business ‘plane’ to avoid stalling in a growth holding pattern.”
Indeed, 56% of CEOs indicated they plan to increase hiring in the year ahead (up eight percentage points from last quarter), while just 7% report plans to decrease their workforce in the next 12 months. As quit rates continue to slow, the hiring landscape has improved, too; 35% of CEOs reported it was easier to hire in late 2023 than it was at the start of 2023.
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Other highlights from the latest index, which is based on survey responses from more than 1,300 U.S.-based small to midsize business CEOs, include the following:
- Nearly half (47%) anticipate higher profits in the year ahead, a five-point increase from last quarter. The two biggest factors contributing to that sense of optimism? Slowing wage increases and continued price increases.
- Twenty percent of SMB CEOs believed that the economy improved during the past year (up from just 9% in Q1 2023), and 43% claimed the economy is worse than a year ago. That’s still an improvement from 46% last quarter and 58% in Q4 2022.
- Slightly more than a third (34%) of SMB CEOs anticipate worsening economic conditions during the next 12 months, down from 42% last quarter and 51% last year.