NEW YORK – A quarterly survey of U.S. chief executives showed they plan to increase hiring and capital spending, despite recent soft economic data, concerns about sluggish job growth and high energy prices.
The Business Roundtable (search), the main association of U.S. CEOs, said the September CEO Economic Outlook survey painted the most positive economic picture since it was launched in November 2002 and suggested CEOs expect steady economic growth.
"Despite the economy's moderate slowdown over the past two months, CEOs remain optimistic about business conditions," said Hank McKinnell, chief executive of Pfizer Inc. (PFE) and chairman of the Business Roundtable. "While the economy hasn't hit its full potential, fundamentals remain solid."
The CEO Economic Index (search), which combines responses on sales, capital spending and hiring, rose to a new high of 101.7 compared with 96.5 in June. A level over 50 signals an expansion.
While weaker-than-expected July payroll data sparked concerns about sluggish job growth, the CEOs surveyed were more optimistic.
In the next six months, 40 percent of U.S. CEOs expect their companies to add jobs, up from 38 percent in June, while 48 percent expect hiring to remain flat compared with 43 percent in June, according to the survey, which was completed by 118 of its 150 members. The survey found that only 12 percent of CEOs expect fewer U.S. jobs in the next six months, compared with 19 percent in June.
The survey also found that 49 percent of CEOs expect to increase higher capital spending in the next six months, while 45 percent expect it to be flat.
The CEOs surveyed lowered their real gross domestic product projection to 3.4 percent in 2004 from of 3.7 in June. This reflected the impact of high oil prices and a dip in consumer confidence, McKinnell said in a conference call.
While noting the slowdown in the second quarter, he added that the survey signaled a stronger second-half amid an increase in business confidence.
He cited the high levels of overtime, a rise in capacity utilization and a return in business confidence to fill positions that were kept open or filled with temporary workers as underpinning the optimism of the survey.
"Second quarter is not the beginning of a trend. After a brief softening, we expect the economy to recover to very good levels of economic growth in the second half," McKinnell said.