Private companies increase investments

Private companies in the US are by and large optimistic that an economic recovery is on its way, according to a report.

After a year of pessimism and uncertainty, a growing number of CEOs of privately held companies in the US are anticipating an economic upturn in the world economy within the next year, said the survey.

A third of the respondents claimed they were optimistic about the global economy over the next 12 months, up 15 points from the previous quarter. Those marketing to emerging countries (like China, India and Brazil) are more optimistic, and predict higher revenue growth, than those marketing abroad to other countries.

However, a considerable 39% responded that they are still ‘uncertain’ about the US economy next year, and 27% were pessimistic.

“This increase in investments is a strong indication that private-business owners are planning for a turn in the economy.

Ken Esch, partner with PricewaterhouseCoopers

Anticipating the upturn, companies are beginning to increase their investments in new product or service introductions, followed by information technology and marketing and sales promotion, said PricewaterhouseCoopers, authors of the study.

This represents a major change in outlook, given that three-fourths of the top executives viewed the economy as declining in the second quarter of 2009, according to the same survey last year.

‘This resurgence in optimism and falloff of pessimism has lead to a resetting of revenue growth targets and moderate prospective spending increases over the next 12 months,’ commented Ken Esch, partner with PricewaterhouseCoopers Private Company Services practice. ‘This increase in investments is a strong indication that private-business owners are planning for a turn in the economy.’

The study incorporated the views of 256 CEOs from 137 companies in the product sector and 119 in the service sector.