Accountants and financial professionals are feeling less upbeat about the economy in North America in the third quarter of the year, according to a quarterly survey released Thursday by the Association of Chartered Certified Accountants and the Institute of Management Accountants.
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The indices for "New Orders," "Employment" and "Capital Expenditure" indices all saw modest declines but only the last is below its average, but the survey was done before the outbreak of war in Israel and Gaza on October 7. Concerns about customers going out of business ticked up slightly, but fears about suppliers fell to the lowest level since 2019.
"Overall, the GECS survey remains consistent with some further loss in global economic momentum, although it does not suggest that a downturn is imminent," said Jonathan Ashworth, chief economist at ACCA, in a statement. "That said, the risks to global growth are heavily stacked to the downside. These risks include the lagged impact of past monetary tightening, soaring government bond yields, rising oil prices, the Chinese economy, and geopolitics. Accountants should advise their firms or clients to plan accordingly."
Confidence declined sharply in North America, after four straight quarters of improvement. "The fall in confidence in North America of almost 20 points stands out," Susie Duong, senior director of research and thought leadership at IMA, said in a statement. "While the fall in the U.S. of nine points was not quite as marked, the Federal Reserve's aggressive policy tightening clearly appears to be having an impact."
Despite those concerns, the U.S. Bureau of Economic Analysis reported gross domestic product grew strongly at an annual rate of 4.9% in the third quarter of the year, the fastest pace of economic growth in almost two years.
One focus for accountants will be inflation. Concerns about "increased costs" slipped a bit in the latest quarter. While cost pressures appear to have peaked, they remain well above the average seen over the survey's history.
In contrast to North America, confidence in Africa rose materially for the second successive quarter. Asia Pacific saw a modest improvement, perhaps reflecting tentative signs that policy easing is leading to some improvement in the Chinese economy.
Economic sentiment declined again in Western Europe and is down significantly in the past two quarters, probably reflecting the weakness in the European Union and U.K. economies.
"The U.K. data retrieved from GECS Q3 shows a mixed picture," said Gemma Gathercole, strategic engagement lead for England at the ACCA, in a statement. "What we're seeing from members is caution, adopting a 'wait and see' approach before making any key decisions. Controlling inflation is essential to our members, many of whom support SME businesses and are most likely to feel the heavy costs of suppliers and narrowing margins first before the larger companies. We have seen that financial professionals want to err on the side of optimism, but more economic stability is needed to help make that happen."
Confidence in the Middle East also declined, despite the rise in oil prices in recent months. In South Asia, confidence edged up higher during the quarter but has fallen over the past year.
