Chief Executive Officers in U.S. Turn More Optimistic (Update1)
By Shobhana Chandra
April 7 (Bloomberg) -- Chief executive officers in the U.S. turned more optimistic in the first quarter as sales grew, boosting the prospect that employment and spending will climb, a survey showed.
The Business Roundtable’s economic outlook index rose to 88.9 in the first three months of the year, the highest level since the second quarter of 2006, the Washington-based group said today. Readings higher than 50 are consistent with economic expansion.
Seventy-three percent of executives said they expect sales will grow in the next six months, up from 68 percent in the fourth quarter of 2009, and 47 percent plan to invest in capital equipment. Twenty-nine percent said they will increase payrolls, a 10-point increase from the previous three months.
“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,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc., said in a statement. “The survey shows each category of economic measurement moving in the right direction.”
The survey, taken from March 15 to March 30, represented the responses of 105 company leaders. The index climbed from 71.5 in the previous three months.
Hiring Plans
A first-quarter survey from the Conference Board today also showed hiring plans improving. More than 30 percent of chief executives anticipate employment will rise in their industry, up from less than 3 percent a year earlier. At the same time, 52 percent said the economy will improve in the next six months, compared with 58 percent who said so in the fourth-quarter survey.
Business Roundtable respondents in the estimated the economy will expand 2.3 percent in 2010, less than the 3 percent median estimate of economists surveyed by Bloomberg News last month.
Twenty-one percent of the executives said they would decrease headcount, down from 31 percent in the prior quarter, and half said employment will be unchanged.
Since the recession began in December 2007 to February 2010, the economy lost 8.4 million jobs, the biggest employment slump in the post-World War II era. The Labor Department last week said payrolls rose by 162,000 workers in March, the third gain in the past five months and the biggest in three years. The unemployment rate was 9.7 percent for a third month.
Home Depot
Home Depot Inc., the largest U.S. home-improvement retailer, is among companies turning more optimistic. The Atlanta-based merchant is adding store jobs for the first time in four years in anticipation of a rebound in sales.
“We have already added to our payroll this year,” Chairman and Chief Executive Officer Frank Blake said in an interview this week in Atlanta. “As you have positive transaction growth, you need more associates to handle that in the stores.”
The Business Roundtable is an association of CEOs of corporations representing a combined workforce of 12 million employees and almost $6 trillion in annual revenue.
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