More than 40 percent of the respondents to the latest McKinsey Global Survey1 report that their companies expect to add workers in the short term; most of these new jobs will be created at home, not offshored. Two-thirds of the respondents also say that their companies won't be able to raise prices over the next six months.
In a survey conducted while oil prices were spiking and businesses were feeling the first global effects of the crisis in US credit markets, executives also report a sharp drop in near-term economic confidence, accompanied by a decline in fears of inflation, though the drop is notably smaller. Among those who do fear changing inflation, executives in developed and developing markets alike point to the same culprit: oil prices.
Despite the drop in confidence, respondents continue to report that their companies plan to add workers over the short term (Exhibit 1) and that most new jobs will be created in the same country as corporate headquarters rather than offshored. Only in Europe do a majority of respondents expect more new jobs to be created in a different country. Offshoring and out-sourcing will account for only 15 and 18 percent, respectively, of job losses (Exhibit 2).
The share of respondents who expect inflation to increase has fallen notably across regions—roughly in line with, though less than, the drop in the respondentsÕ economic confidence. More than half of the respondents expect inflation to remain stable over the next six months (Exhibit 3).
That pattern holds even in India, where three months ago only a fifth of the respondents expected inflation to remain stable; more than half currently do. In North America, the only region where more respondents expect worse than better overall economic conditions (39 versus 26 percent, respectively), the share of respondents expecting stable inflation rates surged from 18 percent three months ago to 56 percent currently (Exhibit 4). Unlike three months ago, only in the developed countries of the Asia-Pacific region do a majority of the respondents expect higher inflation. The region’s executives are the likeliest among those in developed economies to expect overall economic conditions to improve.
In the previous quarter, respondents in developed countries and those in emerging ones did not agree about what was driving changes in inflation: while oil prices topped the list of concerns for respondents in the former, their counterparts in the latter said that the main drivers of inflation were demand for goods and services and volatile currencies. No longer: in this survey, with the price of oil continuing to skyrocket, respondents everywhere rank its price as the top driver of inflation (Exhibit 5).
Respondents around the world, regardless of economic conditions in countries or industries, also consistently report that their companies cannot raise prices (Exhibit 6). Nearly half of the respondents report that this problem results from the large number of competitors in their industries; 49 percent attribute it to low-cost competitors. Notable differences arise among industries. Over half of the health care executives, for instance, consider regulation the main impediment to raising prices; among executives in professional services, finance, high tech, and telecommunications, over 60 percent identify crowded markets as a chief obstacle. 
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