Area Development
Almost two-thirds of 258 CEOs/CFOs of America's leading private companies say they're optimistic about the U.S. economy's prospects over the next 12 months. That's one of the key findings of the recently released "Trendsetter Barometer" quarterly telephone survey conducted by PricewaterhouseCoopers (PWC).

Executives surveyed (between Feb. 1 and May 5) work for businesses known for their fast growth, prominent size, and/or established industry-leader reputations. These companies average $294.2 million in annual revenues, and employ an average 924 employees. About half of the 258 executives are from the product sector; the other half from the service sector.

More international private companies are optimistic about the U.S. economy (67 percent) than domestic-only companies (61 percent). Meanwhile, optimism about prospects for the world economy among private companies selling abroad has held relatively steady.

"We're seeing the return of the U.S. consumer and the strengthening of the domestic market," said Ken Esch, a partner with PwC's Private Company Services practice. "At the same time, there has been increasing uncertainty around the globe, including political unrest, natural disasters, and renewed concern over debt problems in European countries. It stands to reason, then, that Trendsetter companies operating abroad have begun to view the U.S. economy somewhat more positively than the world economy. Yet the Recession has also shown the limitations of having a domestic-only business, and so we expect that private companies will continue to seek opportunities abroad -- particularly in emerging and fast-growth markets -- as an effective way to hedge economic risk at home."

Eighty-five percent of these executives forecast positive own-company growth--up from 83 percent last quarter--with 40 percent projecting double-digit revenue growth and 45 percent projecting single-digit growth. Only 4 percent expect negative growth revenue over the next 12 months.

The forecasted average growth rate among private companies rose this quarter to 10.2 percent, up from 9.8 percent last quarter. International marketers pulled ahead of their domestic-only peers, forecasting 10.7 percent growth versus 9.9 percent.

Of the private companies with an international presence, significantly more of those operating in China, India and Brazil are planning major capital investments in the next year (60 percent compared with private companies operating in international markets overall (48 percent while only 29 percent of domestic-only businesses are planning the same.

"While costs have been increasing rapidly, private companies have still been able to maintain their margins," added Esch. "In a challenging pricing environment, they're faced with either eliminating costs in the supply chain or increasing prices -- or a combination of both. The need to manage supply chain costs will underscore the importance of maintaining strong relationships with suppliers."

The survey also revealed that 63 percent of these executives say they plan to hire new employees over the next 12 months (up six points from the prior quarter). Private-company executives report that over the next year their hiring efforts will primarily target professionals/technicians (38 percent) and sales/marketing people (24 percent).

Notably, 26 percent of private companies surveyed cite the lack of qualified workers as a barrier to growth--an increase of 8 points from the previous quarter and up 15 points from a year ago.