Top executives of U.S. companies expect to see continued strength in the nation's economy over the next six months, especially in new hiring, according to a survey released by the Business Roundtable on Thursday.
High energy prices remain an area of concern, according to the quarterly survey of Roundtable members -- chief executives of large U.S. companies. The respondents also expected overall U.S. economic growth to slow to about 3.2 percent in 2006, from 3.5 percent in 2005.
"Based on today's survey, we see job growth and continued investment, a winning combination at this part of the business cycle," Hank McKinnell, chairman of the Business Roundtable and chief executive of Pfizer Inc. , told reporters on a conference call.
CEOs see core inflation as surprisingly well-contained despite high oil prices, with warm winter weather helping to alleviate the crunch from increased fuel costs, he said.
The overall CEO Economic Outlook index rose to 102.2 in March from 101.4 in December. It was the second-highest reading ever, behind 104.4 in the March 2005 survey. Any number higher than 50 indicates economic expansion.
Chief executives gave their strongest backing of employment since the Roundtable began compiling the survey in fall 2002, a particularly bright note, McKinnell said.
Some 43 percent of responding companies expected to increase employment in the next six months, compared with 40 percent three months ago. Another 42 percent expected no change, and 15 percent said they would cut jobs.
"You are seeing business confidence increasing to the point where people are willing to add permanent jobs to the payroll as opposed to trying to fill that need through additional overtime," McKinnell said.
By contrast, McKinnell said, in November 2002, only 11 percent of CEOs said they would be hiring.
Of the CEOs responding to the survey, 50 percent expected to increase capital spending, compared with 56 percent in the prior survey.
"The fact that half of our companies are planning to increase spending on plants, equipment and technology bodes well for economic growth," McKinnell said, noting that it suggests anticipated strong demand for goods and services.
The survey also found that 85 percent expect sales to increase over the next six months, down from 87 percent in its December survey.
The survey was compiled from responses from 125 of the 160 Roundtable member companies from Feb. 10 through Feb. 23.