Optimism on the global economy remains fleeting at best for CFOs from North America’s largest companies. According to the Deloitte CFO Signals survey, CFO optimism last quarter took a solidly positive turn after two dismal quarters to end 2011. However, amid a continued stream of bad global economic news in the second quarter of 2012, CFOs became more pessimistic and began to look decidedly inward at what they can control within their organizations.

The quarterly survey, which tracks the thinking and actions of chief financial officers representing North American companies averaging more than $5 billion in annual revenue, shows only 39% of CFOs are more optimistic this quarter about their companies’ prospects (compared to 63% last quarter), and 29% report rising pessimism (up from 15% last quarter). The sentiment is even bleaker in the U.S., where equal proportions of CFOs are more optimistic and more pessimistic. Moreover, their rising worries about Europe and domestic policy appear to be driving companies to hunker down and focus more on industry- and company-level issues.

“Continued high unemployment is driving rising concerns about consumer demand at home, and that seems to be shifting some of CFOs’ focus away from the things that are still uncertain – especially the European debt crisis, the upcoming elections in Europe and the U.S., and the fiscal cliff in the U.S.,” said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. “With such uncertainty, it is little wonder that many of them are retrenching and focusing less on new markets, and more on working capital, inventories, and further efficiency gains.”

In fact, unemployment topped CFOs’ economy-level concerns for the first time this quarter, with 59% of U.S. CFOs ranking it in their top three (well above last quarter’s previous high of 43%). Overall CFO expectations for year-over-year earnings growth, capital investment and even sales remain positive. In addition, their projection for domestic hiring remains steady at an uninspiring 2.1%.

“With large corporations performing very well over the past few years, there is rising concern about how much longer they can keep it up in a slow-growth world,” said Greg Dickinson, who leads the Deloitte CFO Signals survey. “Up until now, CFOs have been confident in their companies’ ability to get even more focused and more efficient. But a large percentage of them are seeing diminishing returns and do not believe the gains will continue beyond a year from now.”

To download full survey results click here.