CEOs bullish on economy, survey shows

/ Source: The Associated Press

Despite rising prices for energy and other materials, America’s chief executives feel pretty good about the business climate and are bullish about their sales prospects, according to a survey released Wednesday.

The Business Roundtable’s survey also said executives believe the national economy will log solid growth this year of 3.4 percent. That would be slightly less than the 3.5 percent registered last year.

“Our survey shows that CEOs believe the U.S. economy has the strength and stamina to withstand the challenges of high oil prices and rising interest rates,” said Hank McKinnell, chairman of the Business Roundtable and chief of Pfizer Inc.

The Business Roundtable is an association of chief executive officers of major corporations, representing a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues. The quarterly survey was based on the responses of 116 of the group’s 160 member companies.

Eighty-two percent said their companies were expecting sales to increase in the next six months. Fifteen percent forecast no change and just 3 percent thought sales would decline, the survey found.

On hiring, 41 percent said they expected to boost employment in the next six months, while 20 percent expected to cut workers. About 40 percent didn’t foresee any changes to payrolls. Because of rounding, some totals do not equal 100 percent.

Forty-eight percent said they expected to ramp up capital spending in the next six months, while an equal percentage didn’t expect any changes. Only around 3 percent expected such spending to be trimmed.

“Expectations for company sales remain high ... employment projections remain solid, and capital spending projections reveal a continued willingness to invest, suggesting that business investment is likely to stay healthy,” McKinnell said.

The economy, which barreled ahead at a 5.3 percent growth rate in the opening quarter of this year, is slowing in the current April-to-June quarter to about half that pace. But inflation is on the rise.

Federal Reserve Chairman Ben Bernanke, in a speech Monday, made clear the Fed will take necessary action to prevent inflation from taking hold, a message that sent stocks tumbling. Economists are now predicting another interest rate boost at the Fed’s next meeting, June 28-29. Just six weeks ago, many investors and analysts thought the Fed might take a break in its two-year rate-raising campaign.