Chief executives’ confidence in the nation’s economy, which had retreated to 70 in the second quarter, sagged again in the third quarter of 2004, finishing at 63. A reading of more than 50 points reflects more positive than negative responses.

“CEO confidence has slipped considerably over the past two quarters, as both current conditions and expectations have softened,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “However, nearly a third of CEOs have increased capital spending plans this year, with an increase in sales volume the most cited reason.”

While CEOs’ overall assessment of current conditions remains positive, the level of confidence has weakened. Now, approximately two-thirds of CEOs say current economic conditions have improved, down from 90 percent last quarter. In assessing their own industries, only 57 percent say conditions are better, down from 71 percent last quarter.

CEOs’ short-term outlook is also more tempered. Now, only 55 percent of business leaders expect economic conditions to improve in the next six months, down from 64 percent last quarter. Their expectations for their own industries were more subdued as well, with 52 percent anticipating an improvement, down from nearly 60 percent last quarter.

Approximately 33 percent of CEOs report an increase in their companies’ capital spending plans since January of this year, while only 6 percent have scaled plans back. This is an improvement from last year, when only 12 percent of business leaders had increased their capital spending plans, while 31 percent had made cuts.

The Conference Board’s quarterly measure of CEO confidence covers nearly 100 CEOs in a wide variety of industries.

***

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