CFOs Have Stagnant Financial Expectations

 CFOs Have Stagnant Financial ExpectationsBuilt into CFO earnings expectations are cost projections that are fairly consistent with those from the previous two quarters. CFO expectations for employee benefits cost increases have been rising in each of the last three quarters, outpacing the other cost categories and surpassing 5% during Q4 2010.

 CFOs Have Stagnant Financial ExpectationsCFOs are expecting dividends to rise 4%, down more than 50% from 8.5% during Q3 2010, but Deloitte analysis reveals nearly three-quarters are predicting flat dividends. Energy/resources is the outlier, projecting nearly 11% dividend growth.

Capital spending is expected to rise 8.5% (up from 8% last quarter), but the median expectation is just 4%, with more than 40% of CFOs anticipating flat spending or cuts. All sectors expect increases on the whole, but healthcare/pharma expects only 1%.

Research and development spending, a new metric for this quarter, is expected to rise 4%, with technology and healthcare/pharma companies higher at roughly 7.5%.

 CFOs Have Stagnant Financial ExpectationsDomestic hiring growth expectations of 1.8% for Q4 2010 are slightly below those from the third quarter, and the median expectation is just 1%. On the plus side, no industries are projecting decreases, and energy/resources is projecting increases of 4.5%.

The outlook for offshore and outsourced employment is better with an expected 3.6% increase in offshore personnel (2.8% the previous quarter) and a 2.8% increase in outsourced staffing (1% during Q3 2010). Technology companies expect increases in both offshore and outsourced hiring of nearly 7.5% (and no increases in domestic hiring).

 CFOs Have Stagnant Financial ExpectationsDespite high and persisting unemployment, almost half of the CFOs say their companies are finding it more difficult to acquire sufficiently-skilled people than they did five years ago and 32% indicate no change. Roughly half of CFOs citing difficulties blame changes in staffing needs, and the other half say their regular staffing profiles are getting harder to find. Energy/resources CFOs indicate the highest difficulty filling open positions with nearly 65% citing hiring concerns.

Only 21% of CFOs are finding it less difficult to acquire skilled talent -half because their staffing needs are changing and half because their regular staffing profiles are getting easier to find. More than one-third of retail/wholesale CFOs say hiring is getting easier because their staffing needs are changing; one fifth of technology CFOs agree. Financial services CFOs are unique in answering that their regular staffing profiles are getting easier to find (28% make this claim). If you remove the effects of financial services, only 6% of CFOs are saying their regular staffing profiles are getting easier to find.

Despite the common perception that manufacturing layoffs have created a glut of manufacturing staff, only 5% of manufacturing CFOs say their regular staffing profiles are getting easier to find (roughly one quarter say their regular staffing profiles are getting harder to find).

CFOs of large North American companies were more likely to be optimistic than pessimistic in Q4 2010, although job stresses have reduced CFO optimism since Q2 2010, according to other study results. The Deloitte CFO Signals quarterly survey for Q4 2010 indicates that overall, 53% of surveyed CFOs at North America’s largest companies are more optimistic than they were in the previous quarter.

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