The latest report on sentiment from chief executive officers paints a bullish picture for certain areas of the economy over the next six months. Unfortunately, hiring is not sticking to the canvas.
The Business Roundtable, which is an association of chief executive officers of leading U.S. companies, recently published its first-quarter CEO Economic Outlook Survey. The survey was completed between February 11 and March 1, and provides a forward-looking view on the economy. The results show an improvement in CEOs’ expectations for sales and capital spending for the next six months.
As the chart above shows, the economic index for the survey increased significantly to 81.0 in the first quarter, compared to 65.6 in the fourth quarter. It is the first uptick in four quarters and the highest reading since the second quarter of 2012. The current index has a long-term average level of 79.2.
In terms of the overall U.S. economy, the group expects real GDP to grow by 2.1 percent in 2013, up from last quarter’s estimate of 2.0 percent.
Jim McNerney, chairman of the Business Roundtable and chief executive officer of The Boeing Company (NYSE:BA), explains, “CEOs foresee somewhat better economic performance for the next six months, with improved expectations for sales and capital expenditures. The relatively smaller improvement in the outlook for hiring, however, may reflect ongoing uncertainty and a wait-and-see attitude about the business climate in the United States, as agreement on the nation’s debt and budgetary issues remains elusive.”
Other members of the Business Roundtable include executives from companies such as Bank of America (NYSE:BAC), Microsoft (NASDAQ:MSFT), Sprint Nextel (NYSE:S) and General Electric (NYSE:GE).
The survey’s key findings for the first and fourth quarter are shown below. Although the unemployment rate and jobless claims have been moving down recently, the percentage of CEOs saying they plan to increase employment stayed the same at 29 percent. Meanwhile, 25 percent plan to decrease employment in the coming six months, a slight improvement from 29 percent in the fourth quarter.
The Business Roundtable’s CEO Economic Outlook Survey has been conducted quarterly since the fourth quarter of 2002. The organization represents leading U.S. companies with more than $7.3 trillion in annual revenues and nearly 16 million employees. Members account for almost a third of the total value of the U.S. stock market.
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