A rocky start to 2016 in the global economy and equity markets shook up chief financial officers’expectations for the year’s revenue, earnings, capital spending, and domestic hiring, according to Deloitte’s first quarter (Q1 2016) CFO Signals survey. All declined.

Revenue growth expectations fell to 3.3 percent- from 5.9 percent-last quarter, earnings growth expectations fell to a new survey low of 6.0 percent- from 8.3 percent-last quarter, capital spending expectations hit a new survey low of 1.7 percent*-from 4.9 percent-last quarter, and domestic hiring growth expectations declined sharply to just 0.6 percent-from last quarter’s 1.2 percent — matching the previous survey low.

New lows

CFO assessments of both the North American in the China economies hit new survey lows.

Forty-one percent of CFOs now describe North American conditions as good (down from 55 percent last quarter), and only 36 percent expect better conditions in a year (down from 47 percent last quarter). Only 9 percent regard China’s economy as good, and just 5 percent describe Europe’s economy as good.

The survey, which tracks the thinking and actions of more than 100 CFOs from large North American companies, has recorded 13 straight quarters of positive net optimism, but this quarter’s reading of +1.7 declined significantly from last quarter’s +10.7 and is at its lowest level since Q4 2012. In the same quarter one year ago, net optimism was recorded at +34.4.

Growing concerns

“One difference this quarter seems to be CFOs’ growing concern over how financial markets will react to unfavorable economic news and how consumers will react to volatile equity markets — and what longer-term effects will be on capital liquidity and consumer demand,” said Greg Dickinson, director, Deloitte LLP, who leads the North American CFO Signals survey said in a statement.

“Past surveys have shown that election run-ups tend to have a rather negative impact on CFO confidence, and in previous election years, net optimism had turned negative into the third and fourth quarters.”

op risks cited by CFOs show very strong concerns about the interplay of economic volatility, financial markets and consumer confidence. The top two risks cited overall were external: global economic performance (growth, recession and volatility), followed by oil/commodity prices. There was a three-way tie for third place between two additional external risks — capital market risks (liquidity and stability) and the possibility of new/burdensome regulations. The dominant internal risk related to the talent category: growing concerns about retaining key employees.

To download a copy of the survey:: http://www.deloitte.com/us/cfosignals2016Q1.