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PwC: Private Company Optimism Drops; IT Spending Climbing

November 11, 2011, 06:30 AM
Filed Under: Economy

Confidence in the US economy dropped sharply this past quarter among private company executives surveyed for PwC US’s Private Company Trendsetter Barometer. Just 27% expressed optimism, down 16 points from last quarter. The percentage of executives voicing uncertainty, meanwhile, continued to rise, increasing to 49% - up 7 points from last quarter and still well above the percentage expressing outright pessimism (24%). Among international private companies, pessimism about the global economy (28%) exceeded optimism (21%), with 51% voicing uncertainty.

Despite this drop in optimism for the second straight quarter, revenue forecasts and planned operational spending remain strong. Trendsetter executives forecast a 7.2% average revenue growth rate for the next 12 months. As has generally been the case these past couple of years, international marketers project higher levels of revenue growth than their domestic-only peers (7.6% versus 6.8%). Seventy-eight percent of private companies expect continued growth over the next 12 months - 30% projecting double-digit growth and 48% forecasting single-digit growth.
Operational Spending Plans Remain Strong, Focused on Information Technology

While the percentage of private companies planning major capital investments for the next 12 months declined slightly this quarter to 38% nearly three-quarters (72%) plan to increase operational spending over the same period. Consistent with what we've seen for some years now, international Trendsetter companies lead their domestic-only peers in planned operational spending - 83% versus 63%.

Information technology remains the top area of operational spending for Trendsetter companies overall (39%), followed by new products/services (34%), marketing and sales promotion (23%), geographic expansion (22%), and facilities expansion (21%).

PwC's Private Company Trendsetter Barometer tracks the business issues and best practices of privately held US growth businesses. It incorporates the views of 247 chief executive officers (CEOs/CFOs): 140 from companies in the product sector and 107 in the service sector, averaging $276.8 million in enterprise revenue/sales, and including large, $300M-plus private companies.


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