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Banks Open Their Doors for US Businesses in Third Quarter, Says New Report

October 30, 2013

Marc Gerrone
IMA
(201) 474-1502
mgerrone@imanet.org

Andrew Healy
Water & Wall Group
(212) 625-2363
ahealy@waterandwallgroup.com

ACCA and IMA Global Survey of Finance Professionals Suggests US Government Shutdown Likely to Have Big Impact

New York and Montvale, N.J., October 30, 2013 – According to the latest quarterly survey of domestic and international finance professionals, US businesses have seen substantial improvements in their access to capital in the third quarter of this year. This positive sign, however, may be dulled by the full impact of the U.S. government shutdown, which has yet to be felt. This is among the key findings detailed in the Q3 2013 Global Economic Conditions Survey conducted by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants).

This latest edition of the survey found that hopes for an accelerated recovery in the U.S. were due to a strong improvement in business cash-flow and strengthening demand, falling inflation and a substantial improvement in the supply of growth capital. However, there were also warning signs on the horizon.

According to Emmanouil Schizas, ACCA Senior Economic Analyst and editor of the GEC Survey, “It’s encouraging to hear that banks are once again open to U.S. businesses. There have even been anecdotal reports of banks competing for the attentions of CFOs in smaller U.S. companies, a trend not seen since before the economic crisis.”

“Despite this, however, businesses remain cautious. A greater supply of capital has failed to translate into a proportionate increase in investment, whether in staff or capital. While it’s impossible to guess from these figures the impact of the Government shutdown on the business community, we have seen from previous editions of the GECS that the experiences of the Debt Ceiling and Fiscal Cliff crises was extremely negative. This suggests to us that investment could suffer as a result of the shutdown.”

Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research, said: “After six months of strong confidence gains in early 2013, we’ve seen only marginal improvements in Q3. One quarter of respondents reported confidence gains and 31 percent reported losses – both figures practically unchanged since we last surveyed our members.”

“Yet optimism about the U.S. economic recovery remains; the third quarter of 2013 marked a full year of consistently improving perceptions of the economy, as 57 percent of U.S. companies felt that economic conditions where improving or about to do so, up from 55 percent in Q2. All eyes, however, will be fixed on Q4’s GECS report to see the full impact the government shutdown has had on confidence in the economy as well as within businesses themselves.”

Global outlook

Collectively, around the world, businesses were more optimistic about the economy than they've ever been since the survey was launched, and more confident about their own prospects than at any time since the end of 2010. However, a closer look at the figures reveals that many individual markets did not share this buoyant mood and saw business confidence fall in Q3.

The threat of the Federal Reserve and other Central Banks halting or reversing their extraordinary stimulus has led to a dramatic withdrawal of investment from riskier assets, as well as most emerging markets. The survey findings suggest that the fallout has crept through to the real economy, sending many of the world’s most promising economies into a credit crunch of their own. This timing is particularly unfortunate as it coincides with a deep credit crunch in China, resulting from concerns about the health of the country’s banking sector and the viability of its public finances.

Mr Schizas adds, “What the GECS shows is that monetary policy, real and potential, has now become a stronger influence on business confidence than demand or business opportunities. That's a sure sign of trouble brewing. The idea of a global recovery has taken hold worldwide and the business community is generally optimistic about macro-economic developments, even as they doubt the prospects of their own organizations. This is not really sustainable and it is more likely that recovery expectations are going to re-align themselves with that low business confidence, than vice versa.”

The Q3 findings also show that Europe is the only part of the world economy that is genuinely recovering, as they are finally overcoming the severe credit crunch and contagion caused by the financial and sovereign debt crises. This reversal has seen business sentiment and investment finally aligning themselves to the global averages.

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About the Survey
This is the 19th edition of the Global Economic Conditions Survey and the eight carried out jointly by ACCA and IMA. Fieldwork took place in the third quarter, attracting 2,021 responses from ACCA and IMA members around the world. It is the largest global quarterly economic survey of accountants both in terms of the number of respondents and the scope of economic variables it monitors. For full survey results please visit: http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/tech-ms-gec19.pdf

The ACCA and IMA joint website, roleofcfo.com, is a resource for finance leaders containing ACCA and IMA reports, research and insights.

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants with 162,000 members and 426,000 students in 170 countries worldwide. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

We work through a network of 89 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development.
http://www2.accaglobal.com/usa/

About IMA® (Institute of Management Accountants)
IMA®, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices.  IMA has a global network of more than 65,000 members in 120 countries and 300 professional and student chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org.
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