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Global CFOs: Expect Wage Growth as Corporate Financial Outlook Has Improved

If there’s no such thing as a financial crystal ball (and there’s not), then a global survey of CFOs just might be the next best thing.

The latest Duke University/CFO Magazine Global Business Outlook Survey shows that “U.S. chief financial officers expect more rapid wage growth at their firms to help attract and retain skilled workers and because the corporate financial outlook has finally improved.”

The survey “concluded March 6, and generated responses from 1,071 CFOs, including 575 from the U.S. and Canada, 160 from Asia, 159 from Europe, 129 from Latin America and 48 from Africa.” Sectors covered include retail/wholesale, mining/construction, manufacturing, transportation/energy, communications/media, technology, service/consulting (with some taking on the job in cfo consulting firms) and banking/finance/insurance.

Screen Shot 2015-03-19 at 12.00.54 AMAccording to the report, “About 70 percent of U.S. companies indicate that wages are starting to outpace inflation. Wage growth should be at least 3 percent in tech, services and consulting, manufacturing and health care.”

Said the survey’s director, John Graham, a finance professor at Duke’s Fuqua School of Business: “The U.S. is finally entering a new phase in the economic recovery. The first few years of recovery were ‘jobless’ and, even as job growth picked up over the past year, wages remained stagnant. Finally, we are starting to see wage growth for employees that outstrips inflation. Given that CFOs expect continued strong employment growth, it is surprising that wage pressures are not even greater.”

Indeed, according to the Wall Street Journal: “Nearly one-third of business executives expect the value of the dollar to increase 10% relative to the euro, according to the survey. Among executives who expect at least 10% dollar appreciation, 13.8% said currency values will have a negative effect on capital spending plans, and 8.6% expect a negative effect on hiring plans. (The survey was conducted through March 6; the dollar has strengthened further since then.)”

The Journal further notes:

  • “About 70% of U.S. companies said they expect to increase wages by at least 3%. Wage growth should exceed 3% in the tech, services and consulting, manufacturing and health care sectors; wages in the energy, retail and communications sectors are expected to increase less than 2%.
  • “On a scale from 0 to 100, U.S. CFOs rate the economic outlook at 65, the most optimistic expectation for the U.S. economy since 2007.”
  • “Only 23% of European CFOs believe the European Central Bank’s quantitative easing program will actually increase inflation.”

So what could go wrong? Lots, of course. CBS Moneywatch reports: “Tempering those executives’ optimism, however, are ongoing concerns over economic uncertainty, government policies and regulations, the cost of benefits, data security and hiring and retaining the right employees.”

Duke Professor Graham discuss the results here: