In the latest McKinsey Global Survey on economic conditions, expectations for the respondents’ domestic economies are more pessimistic now than at the start of 2022. The same holds true for company performance, though respondents’ expectations for their companies’ profits are more upbeat now than in September. For the first time this year, weak customer demand tops the list of cited risks to company growth over the next year, overtaking supply chain disruptions—the most-cited threat in the previous two quarters.
Profits: Respondents are much more likely now, compared with the September survey, to expect profits to increase: 59 percent say their companies’ profits will grow in the next six months, up from 51 percent in the previous survey. We see optimism increasing in each industry. However, those findings remain less cheery than in the March survey, when nearly two-thirds of all respondents expected profits to grow.
Customer demand: Just 51 percent of respondents expect demand for their companies’ goods or services to increase over the next six months, the same share as in September. Looking across industries, respondents in advanced industries and energy and materials have become increasingly more likely since June to predict growing demand.
Workforce size: Thirty-eight percent of respondents expect their companies’ workforce size to expand in the next six months—the same share that expect their workforces to remain the same. In the last three surveys, an increasing share of respondents in energy and materials expect their workforces to grow, and in the latest survey we also see respondents in advanced industries more likely than in September to expect a growing workforce. On the other hand, respondents in consumer goods and retail are now less than half as likely as in the first 2022 survey to predict a growing workforce.
This update was edited by Heather Hanselman, an editor in the Atlanta office.
Across industries, only respondents working in energy and materials and financial services report more upbeat expectations for their companies’ profits or demand for their goods or services than in the previous survey.
In the latest McKinsey Global Survey on economic conditions, respondents’ expectations for their companies’ performance are more somber than they have been since early in the COVID-19 pandemic. This pessimism comes as companies feel the impact of cost increases. Nine in ten respondents report cost increases in the past six months—particularly the effects of rising energy prices and material costs. Yet respondents in sectors such as energy and materials and financial services report brighter spots compared with the June 2022 survey.
Profits: Responses reveal a continued pessimism toward future company growth. Just over half of all respondents expect profits to increase, down from 65 percent six months ago. While in most industries, expectations for profits have become less positive since December 2021, respondents working in the energy and materials sector have a rosier view of their profits over the next six months than they did last quarter.
Customer demand: Overall, just 51 percent of respondents expect demand for their companies’ goods or services to increase over the next six months, the smallest share since July 2020. While respondents in consumer goods and retail and technology, media, and telecommunications are much more pessimistic about demand than they have been since mid-2020, respondents in financial services and advanced industries are more hopeful now than in the previous survey.
Workforce size: Nearly four in ten respondents expect their companies’ workforce size to expand in the months ahead. While respondents’ expectations for hiring in many industries remain mostly aligned with the previous quarter’s, respondents in financial services are much more likely now than in June to expect their employers to increase their headcount.