A quarterly survey of U.S. corporate heads released Wednesday showed more chief executives see moderate gains in sales, capital spending and hiring over the next six months, another indication the economy is moving in the right direction.
The Business Roundtable CEO Economic Outlook Index still shows that half of the executives expect no change in U.S. employment, but 29% see an increase, compared to 19% in the fourth quarter of 2009.
"As the economy recovers and demand returns, we are seeing across-the-board increases in sales, resulting in increased capital expenditures, less job reduction and some employment stabilization," Business Roundtable Chairman Ivan Seidenberg said.
The U.S. jobless rate remains steady at 9.7%, while the economy has lost nearly 8.5 million jobs as a result of the most severe recession in about 80 years. Although the downturn probably ended nine months ago, companies remain reluctant to ramp up hiring because the economy's recovery is expected to be moderate.
After the release of the Business Roundtable's third-quarter 2009 survey, Seidenberg said it would be 12 to 18 months before growth filters down to employment.
The first-quarter 2010 survey shows 73% of the CEOs expect their sales to increase, compared to 68% from the group's fourth-quarter survey. About 5% of CEOs in this survey expect sales to slip, with 23% expecting no change.
The survey also shows 47% of executives expect capital spending to increase, while 46% expect no change and 7% see a decrease. The fourth-quarter survey showed 40% of executives expected an increase.
The Business Roundtable CEO Economic Outlook Survey on projected sales, capital spending and employment is combined into an overall index. The index value can range from -50 to 150, with a number below 50 indicating economic contraction, the group said.
The index for first-quarter 2010 is 88.9, a sizable gain above the -5 index value for the same period last year. Looking back, the fourth-quarter 2009 index value was 71.5, the third-quarter figure was 44.9 and the second-quarter value was 18.5.
The survey has been conducted quarterly since the fourth quarter of 2002, after the previous U.S. recession ended.
The Washington-based Business Roundtable is an association of CEOs for 161 top U.S. companies. The quarterly survey is completed between March 15 and March 30 and aims to provide an outlook on U.S. economic growth for the subsequent six months.
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