Only about one-third of U.S. CEOs expect to hire, spend more in next six months, down from about half who said so three months ago: Business Roundtable
September 29, 2011
– Only about one-third of chief executives of the nation's largest companies expect to hire or spend more in the next six months, down sharply from about half who said so three months ago.
The Business Roundtable said Thursday that rising oil prices earlier this year, fears surrounding Europe's debt crisis and political wrangling over the U.S. borrowing limit have made the business and economic environment more uncertain.
Only 32 percent of the CEOs surveyed said they expect to spend more on long-lasting equipment, such as machinery and computers. That's down from 61 percent who said so three months earlier.
Jim McNerney, CEO of Boeing Co. and chairman of the Business Roundtable, said the results are generally consistent with slow growth, rather than a recession. The group's economic outlook index fell to 77.6, down from 109.9 in the second quarter. A reading below 50 would signal contraction.
"It's not that it's fallen off a cliff, but it's moderated," McNerney said, referring to the CEOs' spending and hiring plans.
Even before the recession, the percentage of CEOs who expected to hire rarely topped 40 percent. In the January-March quarter of this year, 52 percent of respondents said they expected to add staff -- the highest proportion since the survey began in 2002.
John Engler, president of the Business Roundtable, said the outlook index for the July-September quarter is close to the index's average reading of 78.
The number of CEOs who expect to cut staff rose to 24 percent from 11 percent, the survey found, suggesting that layoffs could grow.
CEOs are also more pessimistic about the economy: They are forecasting 1.8 percent growth this year, down from a 2.8 percent estimate in last quarter's survey.
Historically, though, most job growth in the United States comes from smaller and newer businesses. Small companies created 65 percent of net private-sector jobs in the past decade, according to the Small Business Administration.
Newer businesses are even more crucial. Companies less than 5 years old accounted for all the net job gains from 1980 to 2005, according to the Kauffman Foundation, which studies entrepreneurship.
The Business Roundtable's results are based on a survey of 140 CEOs from Aug. 29 through Sept. 16. The roundtable represents CEOs of the nation's 200 largest corporations.
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