U.S. CEOs view of economy worsens in 3Q: Roundtable
Written by Reuters
Thursday, 29 September 2011
BOSTON: U.S. chief executives' view of the economy deteriorated sharply in the third quarter, with the number who expect to cut jobs roughly doubling, according to a survey released on Thursday, Sept 29.
A quarterly survey by the Business Roundtable found that 24 percent of CEOs expected to cut jobs in the U.S. over the next six months, more than double the 11 percent who had forecast that in the second quarter.
The number who expected the companies' sales to rise fell to 65 percent from 87 percent and the number who expect to boost capital spending fell to 32 percent from 61 percent.
The overall CEO Economic Outlook index dropped for a second consecutive quarter to 77.6, its lowest point since the fourth quarter of 2009. Even at the lower level the diffusion index remained above 50, implying that CEOs expected the economy to grow.
Overall, CEOs look for real U.S. gross domestic product to rise 1.8 percent this year, sharply lower than the 2.8 percent growth forecast in March.
"While we see strong business fundamentals in America still, the quarterly survey results reflect increased uncertainty among CEOs concerning the economic climate and business environment," said Boeing Co (BA.N) CEO Jim McNerney, who chairs the Roundtable.
There were sharp drops on all three readings -- sales, capital spending and employment.
For most of the past two-and-a-half years, the index had been recovering from the record low of negative 5 hit in the first quarter of 2009, in the immediate aftermath of the financial crisis that brought down Bear Stearns and Lehman Brothers. The survey has been conducted quarterly since December 2002.
Even as investor worries have sent the U.S. stock market, as measured by the broad Standard & Poor's 500 index .SPX, down 14 percent since mid-July, some CEOs have insisted publicly that they are not worried that the nation's economy is slipping back into a downturn.
"In the U.S., we're still seeing economic expansion," Ford Motor Co (F.N) CEO Alan Mulally told a small group of reporters in Bangkok on Thursday. "We're very encouraged by the recovery even though it is slower than in the past."
The survey of 140 CEOs was conducted from August 29 through September 16. Business Roundtable-member companies generate some $6 trillion in annual revenue and employ more than 14 million people. - Reuters