Automotive Capital Confidence Barometer

Economic outlook

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Confidence in an improving global economy is at its highest point in two years.

Sixty-one percent of automotive executives believe the global economy is improving, with another 27% indicating the economy is stable. Driving this confidence are improvements in economic conditions in mature economies and stabilization in the major emerging markets.

The outlook for Europe has brightened in the last six months. Higher levels of employment, rising GDP and more access to capital provide evidence that the region’s economic downturn is subsiding. In the United States, corporate earnings, employment growth and credit availability continue to rise.

Economic confidence reaches two-year high

Confidence levels have risen dramatically over the last 12 months — a clear indication the economy is improving at an increasing rate. This confidence resonates from stable underlying economic fundamentals, particularly in mature markets: growing GDP, credit availability and increased job creation.

Growth expectations continue to rise

Eighty-five percent of automotive executives anticipate global growth. The majority of respondents expect growth between 1% and 3%, although 20% of executives expect the global economy to grow in excess of 3% (up from 14% six months ago).

Q:By how much do you think/expect the global economy to grow in the next 12 months?

EY chart showing automotive executives’ expectations for economic  growth

Commitment to job creation underscores plans for investment

Automotive respondents’ commitment to job creation is at its highest level in two years and highlights that companies need to hire as they prepare to capture growth. Automotive, along with oil and gas and technology, are the sectors where the most jobs will be created and are also among the sectors most likely to pursue acquisitions.

Political instability outweighs economic concerns for automotive executives

While global political instability is believed to pose the greatest near-term risk, it is unlikely to derail the fundamental push for growth. Similar to the Eurozone or US crises, the recent unrest in Syria and Egypt pose challenges; however, these challenges are not expected to be detrimental to the recovery of the global economy over the long term.

Confidence spans leading economic indicators

Companies are broadly positive across economic indicators. Automotive executives indicate increased confidence in economic growth, employment growth, corporate earnings and credit availability. Investors remain somewhat cautious in short term though, with only 21% of respondents having confidence in short-term market stability.