US Treasurers Growing More Confident Suggests On-going AFP CCI Survey

Businesses in the US are growing increasingly confident about their intermediate and longer-term prospects, according to the preliminary findings from the Q1 2013 Association for Financial Professionals (AFP) Corporate Cash Indicators (CCI) survey, which is underway now. Sponsored by State Street Global Advisors, the early results are already indicating that a loosening of cash reserves is underway. 

The AFP CCI measures recent and anticipated changes in corporate cash balances by surveying corporate treasurers across the US and comparing it with previous instances of the survey, which has been running since 2011. The early forward indicator metric for this latest Q2 2013 survey was at -5 this week, following a -4 reading during the previous full Q1 2013 survey at the start of the year. This is only the third negative reading in the history of the CCI survey and indicates that treasurers are expecting to deploy the large reserves of capital built up over recent years in the expectation of future growth. 

“For the first time, the CCI expectations index has shown negative for two consecutive quarters,” said Jim Kaitz, AFP’s president and chief executive officer (CEO). “The change we saw at the end of last year may be the beginning of a trend of companies deploying their cash.” 

Two other AFP CCI metrics released this week show that the pace of cash accumulation in the US is also slowing as reserves dwindle, with the full Q1 2013 CCI results showing cash reserves falling to +10 from a high of +13 the previous quarter. In 2012 the Q1 metric measuring decreasing cash holdings was +13, but this now stands at just +8 year-on-year, illustrating the falling off of reserves. 

AFP’s research team sees the results as being consistent with treasury and other financial professionals growing confidence in the US economy. “Companies that are confident about their ability to generate cash in the future through increased demand for their products and services tend to be more willing to deploy the cash that they have on hand today,” said Kevin Roth, AFP’s managing director of research. 

“In fact, survey participants told us that they would be using corporate cash balances to pay down debt, make capital expenditures and, in some cases, acquisitions,” Roth added.

The AFP CCI launched in January 2011 and is intended to provide US treasury and finance professionals, policymakers and market analysts with timely data on a key determinant of economic activity – namely, corporate cash reserves. The next set of full Q2 results will be published 29 July.  




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