Business Optimism Highest Since 2004

Business optimism for the nation’s economic outlook among has continued to rise from the first quarter and is now at its highest level since 2004, according to the latest data from the Grant Thornton International Business Report (IBR), a survey of more than 3,300 business leaders in 45 countries.

In second quarter 2014, optimism among U.S. business leaders rose eight percentage points to a net balance of 74 percent. The increase in optimism in the United States is consistent with what is occurring globally. In second quarter 2014, optimism among global business leaders rose two percentage points to a net balance of 46 percent. This marks the highest level in the survey’s history, and a 19 percentage-point increase from one year ago.

The notion that U.S. business optimism is on the rise correlates with other recent research from the Grant Thornton LLP 2014 Spring CFO Survey. The survey indicated that, for the first time since 2006, more CFOs believe the state of the U.S. economy will improve (51 percent) rather than remain the same or worsen (49 percent) during the next six months. This also marks the highest percentage in that survey’s history.

“Following a strong first quarter, business leaders across the globe continue to show levels of  confidence we have not seen in more than a decade,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “The increase in optimism, coupled with recent improvements in key economic indicators may finally provide business leaders the confidence to invest in their businesses, create jobs and grow their operations in the coming months.”

IBR data reveals G7 business optimism rose to a record high net 53 percent, up from 28 percent in fourth quarter 2013. Optimism in the European Union, driven by Germany (79 percent), the United Kingdom (80 percent) and Ireland (84 percent), rose six percentage points to a net 43 percent, marking its highest level since 2007.

While optimism in the European Union and G7 economies both reached record highs, BRIC business optimism dropped four percentage points to a net balance of 36 percent. Optimism in China, the world’s second largest economy, also dropped in second quarter 2014. Chinese business optimism decreased to a net balance of 30 percent, an eight percentage-point decrease from last quarter, but a substantial increase from net 4 percent one year ago. Additionally, Japanese business optimism decreased to a net 5 percent, down from 17 percent in the previous quarter.