BOSTON: US chief executives’ view of the economy dimmed in the second quarter of 2012, with fewer expecting to grow sales or add workers than three months earlier, according to a survey by the Business Roundtable.
The group’s CEO Economic Outlook Index fell to 89.1 in the second quarter, down from 96.9 in the first quarter but still well over the 50 mark that separates growth from decline.
Seventy-five percent of CEOs said they expected their companies’ sales to grow over the next six months, down from the 81 percent who expected that in the March edition of the survey. Thirty-six percent plan to add jobs in the US over the next six months, down from 42 percent last time, and 43 percent expect to boost capital spending, down from 48 percent.
The survey comes at the end of a quarter that saw Europe’s economic woes intensify, leading some analysts to forecast slower sales growth for corporate America this year. Investors will get a more detailed view next month when top US companies including Alcoa Inc, JPMorgan Chase & Co. and General Electric Co. report results.
“Continuing concern about the eurozone and questions about economic growth in Asia certainly act as a drag to continued economic growth and expansion here in the US,” said James McNerney, CEO of Boeing Co. and chairman of the Roundtable.
Europe’s woes are far more concerning than slowing growth in China, McNerney said. About a quarter of US exports go to Europe, Roundtable officials said.
“The European situation could decelerate quickly,” McNerney said.
“We hope it doesn’t, but I think it has a greater possibility to decelerate quickly, whereas China is more a matter of having 6 percent growth as opposed to 9 percent growth for a while.”
Europe’s sovereign debt crisis stands as one of the greatest current risks to the world economy. While investors breathed a sigh of relief after this weekend’s elections in Greece, which lowered the risk that heavily indebted country would pull out of the euro currency bloc, concerns are now rising that Spain, the zone’s fourth-largest economy, would need an international bailout.
Political deadlock in Washington ahead of the November elections also is worrying US CEOs, particularly those in the defense industry bracing for $500 billion in automatic additional spending cuts later this year if Congress fails to reach an agreement on other savings and revenues.
That and uncertainty on how US tax policies could change in the coming months has CEOs wary of hiring or committing to large new capital investments, McNerney said.
“Companies are holding back,” he said.
CEOs cut their forecast of overall growth in the US economy, and now look for a 2.1 percent rise in gross domestic product, versus a 2.3 percent forecast in March.
The survey of 164 CEOs was conducted from May 17 through June 8. Business Roundtable member companies generate $ 6 trillion in annual revenues and employ more than 14 million people.
CEOs’ view of economy dims
