The percentage of CEOs who expect a reduction in their workforce during the next 12 months rose for the fifth consecutive quarter, climbing from 28% in the second quarter to 34%, according to an Aug. 7 report from The Conference Board.
For the first time since 2020, the proportion of CEOs who plan to shrink their workforce was greater than the share looking to expand (27%), with another 39% anticipating little change, the report found.
In a July survey of 122 CEOs, 34% said economic conditions were worse than six months ago, down from 82% in the second quarter. While 30% expect economic conditions to grow worse during the next six months, another 30% said they would improve.
Looking at their own industries, 38% of CEOs said conditions were worse than six months ago, down from 69% in the second quarter. In addition, 25% expect conditions in their industry to worsen, while 30% expect them to improve.
“CEO confidence recovered in the third quarter after collapsing in Q2 but fell short of signaling a return to optimism,” Stephanie Guichard, senior economist of global indicators at The Conference Board, said in a news release.
Although a third of CEOs expect their workforce to shrink during the next year, 27% plan to expand their teams, falling slightly from 28% in the second quarter. Another 39% plan to maintain their workforce size, down from 44% in the previous quarter. In addition, slightly more CEOs reported difficulty with hiring qualified workers in key areas than in previous quarters.
CEOs said they faced increasing cost pressures related to suppliers, materials, technology and wages. To manage costs, most CEOs said they plan to rely on technology (such as automation or artificial intelligence tools) to increase productivity, to negotiate with suppliers and to increase productivity by upskilling talent.
On the other side, worker optimism about the job market has hit a record low, according to an Eagle Hill Consulting report. As a result, employees seem more likely to stay in their jobs during the next six months, continuing a trend from the beginning of 2025.