Money managers believe the U.S. economy will remain stable over the next six months, but fewer managers expect U.S. corporate earnings growth to accelerate than in the previous quarter, according to Northern Trust's quarterly investment manager survey.
Fifty-four percent of managers surveyed by Northern Trust believe U.S. GDP will remain the same over the next six months, up from 49% the previous quarter, while 38% believe it will accelerate, down from 48% the previous quarter.
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Ninety-nine percent of surveyed managers, meanwhile, believe U.S. job growth will continue over the next six months. Fewer managers, 15% this quarter versus 26% the previous quarter, believe job growth will accelerate, while 65% this quarter versus 60% the previous quarter see job growth remaining stable. More managers this quarter — 20% — believe job growth will decelerate but remain positive than the previous quarter's 14%. Only 1% of surveyed managers believe job growth will decline.
“More managers expect U.S. economic growth to be stable rather than accelerating in this quarter's survey, while U.S. equity valuations are a little less attractive and volatility is expected to rise,” Christopher Vella, chief investment officer for Northern Trust's multimanager solutions unit, said in a news release. “For the first time in several quarters, managers are more bullish on non-U.S. developed market equities and U.S. small-cap stocks than they are on U.S. large-cap equities.”
Eighty-eight percent of survey respondents said European markets are appropriately valued or undervalued, compared with 62% who said U.S. equities were appropriately valued or undervalued.
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Non-U.S. developed equities in general had the highest ranking in the survey, with 55% of respondents saying they rated them bullish or very bullish over the next six months, followed by U.S. small-cap equities at 46%.
The overall outlook for the eurozone is somewhat optimistic despite the continuing negotiations over Greek austerity measures and debt repayments, with 74% saying the probability of a eurozone crisis over the next six months is small.
The survey was sent to money managers who manage assets for Northern Trust and its clients.
Rob Kozlowski is a reporter at sister publication Pensions & Investments.
