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.