The YPO Global Pulse Confidence Index for Africa, which includes the African continent except North African and Middle-Eastern countries, declined 2.2 points to 65.4, reflecting a relatively muted reaction to the socio-political unrest in some of its neighbours to the north. Chief executives in the African region had been more optimistic than the global sample for six of the seven previous quarters, and is now relatively on par with the global reading of 64.3.
CEOs in Tanzania and Nigeria were among the most optimistic about economic prospects. South Africa came in at 63.4, two points below the regional level and firmly in optimistic territory.
The April quarterly survey results were announced by YPO Young Presidents’ Organization, a not-for-profit global network of 18,000 chief executive officers. The YPO Global Pulse is the only CEO economic sentiment survey to span the globe on a quarterly basis, capturing answers from more than 2,500 CEOs representing companies of all sizes. Altogether, the companies run by YPO members employ more than 15 million people globally and generate US$5.4 trillion in annual revenues.
Year-on-Year Sales Growth Outpaces Hiring
Half (51%) of the Africa CEOs surveyed reported significant sales improvements (≥10%) in the most recent quarter compared to the previous year, with only 15% reporting sales declines. However, during the same period, 71% added no employees and another 7% reduced headcounts by 10% or more.
Hiring Outlook in the Service Sector Improves
The service sector became more optimistic about adding jobs over the coming year, with 47% of service-sector CEOs expecting to increase headcounts by 10% or more compared to 34% who said the same thing in January. The non-services sectors (production plus construction) moved in the opposite direction: 36% plan to hire new workers, compared to 48% who said so last quarter. The divergent moves of these two sectors resulted in an employment confidence index reading of 59.2 for the region, practically unchanged from January and on par with the global level of 59.9.
Sales Confidence Stays High
The Africa sales confidence index for April remained roughly unchanged at 71.1, significantly above the employment index and just slightly ahead of the global reading of 70.2. Three-quarters of the survey participants expected their sales figures to be at least 10% higher this time next year. These expectations are consistent across the services, construction and production sectors. By company size, small companies (˂100 employees) were a bit more tempered, with 54% saying they expected higher sales 12 months hence, down from 70% who said so in January.
Fixed Income Index Down from Lofty Level
The fixed-investment confidence index for Africa dropped 8.6 points to 64.6, putting it back near its October, 2010 level yet still ahead of the global index of 62.6. All sectors cooled their capital spending plans slightly compared to last quarter, but even so, CEOs were upbeat, with 62% expecting to boost fixed investment over the next 12 months.
“The civil unrest to the north notwithstanding, CEOs in the Africa region are an upbeat bunch, with respect to their projections six months hence as well as one year from now,” said Bill Blair, member of the YPO Johannesburg Chapter and chair of the YPO Africa region. “Despite the region’s exposure to the events in the Middle East, continued foreign direct investment from China and other favorable dynamics have kept the African region on par with the rest of the world in terms of their sales, hiring, and capital spending confidence.”
The YPO Global Pulse Index for the first quarter of 2011 fell slightly to 64.3 from 64.7. The modest decline in the global index is largely attributable to the Middle East and North Africa region where confidence fell nearly 10 points to 58.3 amidst civil unrest. Latin American confidence fell 2.5 points to 66.2, but remains one of the most optimistic regions in the global sample. Confidence movements in other regions around the globe were slight. Asia remains the world’s most confident region, its confidence index slipping only one-fifth of a point despite the impact of the natural disasters in Japan.
YPO Global Pulse Confidence Index
The YPO Global Pulse Confidence Index combines CEO answers about expected and most-recent-quarter sales, employee numbers, fixed investment and business conditions. The index is centred on 50. An index reading below 50 indicates a negative outlook – the lower the number, the more negative the outlook. A reading above 50 indicates a positive outlook – the higher the number, the more positive the outlook.
The quarterly electronic survey, conducted in the first two weeks of April 2011, gathered responses from 2,582 chief executive officers across the globe, including 97 from the Africa region (excluding Northern Africa and Middle Eastern countries). Globally, 26% of participants are from large companies (more than 500 employees), 37% from medium-sized companies (100-500 employees), and 37% from small companies (less than 100 employees). By business sector, 22% of participants are from the production sector, 8% from construction and 70% from the services sector.
For more information, go to www.ypo.org/globalpulse.
Comment on this article!