Chief Executives in US Become More Optimistic About Economy
Dec. 8 (Bloomberg) -- Optimism among chief executiveofficers about the U.S. economy rose to a one-year high as moresaid they expect stronger sales and plan to boost spending whilelimiting hiring.
The Business Roundtable’s economic outlook index increasedthis quarter to 71.5, the highest since July-September 2008,from 44.9 in the previous three months. Readings higher than 50are consistent with economic expansion.
Sixty-eight percent of executives said they expect sales togrow, compared with 51 percent in the third quarter, and 84percent plan to either boost capital spending or hold it steady.Most respondents said they would limit hiring, posing a hurdlefor the recovery next year.
“The economy is in the throes of a long transition back tohealth; recovery will be long, extending beyond 2010,” Ivan G.Seidenberg, chairman of the Business Roundtable and chiefexecutive officer of New York-based Verizon Communications Inc.,said in a statement.
The survey, completed between Nov. 5 and Nov. 30, showedthat CEOs estimate the economy will expand 1.9 percent in 2010.
Fifty percent of executives said there would be no changein employment at their company during the next six months and 31percent projected a decrease. Nineteen percent said they plannedon increasing headcount. In the third quarter, 47 percent saidemployment would be unchanged, 40 percent forecast a drop, while13 percent anticipated adding to payrolls.
Manpower Survey
The employment results are more pessimistic than thosereported by Manpower Inc. today. The world’s second-largestprovider of temporary workers said 12 percent of the more than28,000 companies it surveyed planned to hire additional staff inthe first quarter, matching the share that anticipated morecutbacks. Seventy-three percent projected payrolls will beunchanged.
The economy has lost 7.2 million jobs since the recessionbegan in December 2007. Labor Department data last week showedjob losses eased. Payrolls fell by 11,000 in November, thesmallest decline since the start of the recession.
President Barack Obama today will propose upgradinginfrastructure and helping small businesses as ways to spur jobgrowth, an administration official said. The president saidyesterday he will look at “selective approaches” to using aportion of the $700 billion Troubled Asset Relief Program tobolster employment, such as opening up more credit for small-and medium-sized businesses.
Health Care
Thirty-three percent of executives surveyed said healthcare is their greatest cost concern. That was followed by 18percent citing pension costs and 17 percent citing labor.
The projected gains in spending and sales corroboratereports from some service companies in the U.S.
FedEx Corp. said yesterday its fiscal second-quarter profitwill exceed its forecast as international and ground shipmentsincreased, signaling a strengthening in the global economicrecovery. The world’s largest cargo airline flies goods rangingfrom industrial parts to electronic equipment to financialdocuments, making its business a proxy for overseas commerce.
International air volumes rose each month during thequarter as companies replenished inventories, according to theMemphis, Tennessee-based company, which also cited improvementsin U.S. ground deliveries.
Overseas demand has “improved significantly,” Alan Graf,chief financial officer of FedEx, said in a statement. Thecompany is No. 2 in the world in package deliveries behindUnited Parcel Service Inc.
The Business Roundtable is an association of CEOs ofcorporations representing a combined workforce of 12 millionemployees and almost $6 trillion in annual revenue.
To contact the reporter on this story:Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
Last Updated: December 8, 2009 11:05 ESTSource: Bloomberg
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