Hiring will slow over the next year despite increasing confidence in the economy. That's the picture painted in the recent Q1 2024 Vistage CEO Confidence Index Report, a quarterly survey of over 1,750 small to midsize business CEOs by Vistage, an organization that provides executive coaching.
The report shows that CEOs plan on hiring less over the next year than in previous reports. Notably, 51% of CEOs reported plans to expand their companies' workforces over the year ahead, compared to 56% last year. What's more, 10% of the executives said they had plans to decrease their workforces over the next year, up from 7% last quarter.
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Inflation remains a primary concern
Inflation in the labor market may be to blame for the lackluster hiring forecast. Sixty-five percent of CEOs in Vistage's report cited labor as the biggest source of inflation impacting their companies. Further, 51% reported planning to raise the costs of their products and services in response to inflation, a 3% decrease from last quarter.
CEO optimism continues to climb
Despite a worsening outlook for employees, CEOs are increasingly optimistic about economic growth. Perhaps most notably, only 21% of executives in the survey expect the economy to shrink over the next year, down from 53% last year. Sixty percent expect their business' revenues to increase over the next year. About 26% say they think the economy will improve over the next year, 13% more than in Q3 2023.
Experts urge caution on latest findings
Speaking on the report's findings, Joe Galvin, Vistage's chief research officer, said he saw reason to believe the economy would grow in 2025, saying: "We've observed a notable improvement in economic sentiment, which has been a key driver behind the surging Vistage CEO Confidence Index. While expectations for revenue and profits have remained stable compared to the previous quarter, we've noticed a slight increase in investment for expansion initiatives, tempered by a decline in intentions to hire. We are cautiously optimistic we are slowly inching towards a 2025 growth cycle."
ITR Economics Vice President of Economics Jackie Greene struck a similarly sober tone on the study's findings: "While the Index has indeed climbed to 85.9, it's also noteworthy that this level mirrors recessionary lows Vistage recorded pre-pandemic. It is important to have caution interpreting the rise in the Vistage CEO Confidence Index level as an outright positive sign for the overall economy, and instead look at the more complete picture Vistage's Index has captured over the last 20+ years."
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