Chief executive officers in the U.S. turned less optimistic in the third quarter as fewer projected sales and hiring will improve, a survey showed.
The Business Roundtable’s economic outlook index fell to 86 in the July-to-September period, the first decrease since the beginning of 2009 when the gauge dropped to a record-low of minus 5, the Washington-based group said today. Readings higher than 50 coincide with an economic expansion. The gauge fell from a second-quarter reading of 94.6, the highest since 2006.
Sixty-six percent of respondents said they expect sales will grow in the next six months, down from 79 percent in the second quarter, while 31 percent said they will add to payrolls, a decrease of 8 percentage points. At the same time, companies are taking the opportunity to invest in new equipment, signaling capital spending will be a source of strength for the U.S. economy.
“This is, and will continue to be, somewhat of a long and uneven recovery,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc., said today in a teleconference. “We’re not seeing a lot of major momentum develop here.”
Forty-nine percent of executives said they plan to spend more on equipment, up from 43 percent, the survey showed.
Cut Forecast
The executives reduced their economic growth forecasts to 1.9 percent for 2010 from 2.7 percent in the previous survey. That compares with the 2.7 percent median estimate of economists surveyed by Bloomberg News from Sept. 1-8.
“We’re not seeing business fundamentals deteriorate to the point where we would be concerned in a major way about a double dip,” or another recession, said Seidenberg, 63.
The Business Roundtable survey, taken from Sept. 1 to Sept. 21, included the responses of 125 chief executive officers.
A separate survey today showed confidence among U.S. consumers fell in September to the lowest level in seven months as Americans became less optimistic about the labor market.
The Conference Board’s index of confidence declined to 48.5, lower than forecast, from 53.2 the prior month, figures from the New York-based private research group showed today. The median estimate of economists in a Bloomberg News survey was for a decline to 52.1.
“We’re still seeing some caution from consumers and companies alike, and when consumers are cautious, it decreases demand projections,” Seidenberg said. “CEOs need to see growing demand in order to increase hiring.”
Jobs Lost
The recession that began in December 2007 led to the loss of about 8.4 million jobs, the biggest employment slump in the post-World War II era. So far this year, companies have added 763,000 jobs. The unemployment rate was 9.6 percent in August, up from 9.5 percent in July.
Textron Inc., a Providence, Rhode Island-based maker of airplanes and member of the Business Roundtable, said Sept. 21 it is cutting 700 jobs and adjusting production schedules at its Cessna unit because of continued weakness in new orders.
Indianapolis-based appliance and electronics retailer hhgregg Inc. last week announced it was seeking to fill 50 sales positions each at new stores in Manassas, Virginia, and Erie, Pennsylvania.
President Barack Obama this month proposed a package of $180 billion in business tax breaks and infrastructure spending to boost job growth. That would be in addition to the $814 billion in stimulus measures enacted last year.
Fiscal Policy
Obama and Congress should work to accelerate policy decisions before the end of the year, including measures on tax cuts, financial regulation, and health care reform, to clear up uncertainty for businesses, Seidenberg said.
While lawmakers debate whether to extend all or some of the George W. Bush-era tax cuts, a significant tax increase could impede the recovery, Seidenberg said.
“As far as we’re concerned, you have a big tax increase during this period of time, it’s not going to help the growth of the economy,” he said.
Seidenberg, who serves on the President’s Exports Council, also said Business Roundtable respondents agree with the administration’s stance that China needs to let its currency strengthen.
The Business Roundtable is an association of CEOs of corporations representing a combined workforce of more than 12 million employees and almost $6 trillion in annual revenue.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
http://jodnet.blogspot.com
The Business Roundtable’s economic outlook index fell to 86 in the July-to-September period, the first decrease since the beginning of 2009 when the gauge dropped to a record-low of minus 5, the Washington-based group said today. Readings higher than 50 coincide with an economic expansion. The gauge fell from a second-quarter reading of 94.6, the highest since 2006.
Sixty-six percent of respondents said they expect sales will grow in the next six months, down from 79 percent in the second quarter, while 31 percent said they will add to payrolls, a decrease of 8 percentage points. At the same time, companies are taking the opportunity to invest in new equipment, signaling capital spending will be a source of strength for the U.S. economy.
“This is, and will continue to be, somewhat of a long and uneven recovery,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc., said today in a teleconference. “We’re not seeing a lot of major momentum develop here.”
Forty-nine percent of executives said they plan to spend more on equipment, up from 43 percent, the survey showed.
Cut Forecast
The executives reduced their economic growth forecasts to 1.9 percent for 2010 from 2.7 percent in the previous survey. That compares with the 2.7 percent median estimate of economists surveyed by Bloomberg News from Sept. 1-8.
“We’re not seeing business fundamentals deteriorate to the point where we would be concerned in a major way about a double dip,” or another recession, said Seidenberg, 63.
The Business Roundtable survey, taken from Sept. 1 to Sept. 21, included the responses of 125 chief executive officers.
A separate survey today showed confidence among U.S. consumers fell in September to the lowest level in seven months as Americans became less optimistic about the labor market.
The Conference Board’s index of confidence declined to 48.5, lower than forecast, from 53.2 the prior month, figures from the New York-based private research group showed today. The median estimate of economists in a Bloomberg News survey was for a decline to 52.1.
“We’re still seeing some caution from consumers and companies alike, and when consumers are cautious, it decreases demand projections,” Seidenberg said. “CEOs need to see growing demand in order to increase hiring.”
Jobs Lost
The recession that began in December 2007 led to the loss of about 8.4 million jobs, the biggest employment slump in the post-World War II era. So far this year, companies have added 763,000 jobs. The unemployment rate was 9.6 percent in August, up from 9.5 percent in July.
Textron Inc., a Providence, Rhode Island-based maker of airplanes and member of the Business Roundtable, said Sept. 21 it is cutting 700 jobs and adjusting production schedules at its Cessna unit because of continued weakness in new orders.
Indianapolis-based appliance and electronics retailer hhgregg Inc. last week announced it was seeking to fill 50 sales positions each at new stores in Manassas, Virginia, and Erie, Pennsylvania.
President Barack Obama this month proposed a package of $180 billion in business tax breaks and infrastructure spending to boost job growth. That would be in addition to the $814 billion in stimulus measures enacted last year.
Fiscal Policy
Obama and Congress should work to accelerate policy decisions before the end of the year, including measures on tax cuts, financial regulation, and health care reform, to clear up uncertainty for businesses, Seidenberg said.
While lawmakers debate whether to extend all or some of the George W. Bush-era tax cuts, a significant tax increase could impede the recovery, Seidenberg said.
“As far as we’re concerned, you have a big tax increase during this period of time, it’s not going to help the growth of the economy,” he said.
Seidenberg, who serves on the President’s Exports Council, also said Business Roundtable respondents agree with the administration’s stance that China needs to let its currency strengthen.
The Business Roundtable is an association of CEOs of corporations representing a combined workforce of more than 12 million employees and almost $6 trillion in annual revenue.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
http://jodnet.blogspot.com
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