There was good news in the Business Roundtable’s Nov. 8-Dec. 3 survey of 137 U.S. CEOs: Big U.S. businesses expect to hire more, boost capital spending, and increase sales over the next six months and company leaders are increasingly optimistic in the fourth quarter about their short-term business prospects in 2011. The report follows a promising retail sales report from the Commerce Department showing sales rose 0.8 percent in November from October.
The Fourth Quarter CEO Economic Outlook Survey showed that 80 percent of company leaders anticipate an increase in sales over the next six months, up from 66 percent in the third quarter; 59 percent expect their firm’s capital spending will increase, and 45 percent project their firm to hire. The projected hiring could be positive news for the jobless, after the newest figures show the U.S. unemployment rate up to 9.8 percent in November.
Business Roundtable Chairman Ivan G. Seidenberg, also CEO of Verizon Communications, noted that though the survey was conducted before an Obama-GOP tax deal or the Korea Free Trade Agreement came into focus, both will likely add to CEOs already upbeat expectations.
“This is generally good news,” Seidenberg said. “When demand increases, capital expenditures and employment follow, which is what we expect to see in the next six months.”
But the survey’s findings were not entirely encouraging. Asked about their biggest cost pressures, material costs and health care costs topped the list with 29 percent of CEOs saying costs of commodities like corn, cotton, and metals would create the greatest pressure on their company, compared to the 24 percent who said health care costs would. Also, the CEOs predicted that GDP will remain relatively flat in 2011—as companies continue to tread carefully in the coming months, Seidenberg said.
Striking a similar tone to Coca-Cola CEO Muhtar Kent in his recent speech at the National Press Club, Seidenberg cautioned that while “short-term stimulus” such as the extension of the Bush-era tax cuts will rev up demand in the next year “if we don’t head into 2012 and 2013 with more fundamental [tax] reforms we’ll end up dragging our feet a little bit.”
He called for “some permanency around the rules, around international taxes, and around regulations.” Without “reducing the amount of uncertainty, you won’t really get big pickup in investment and the deployment of capital that’s necessary to really supercharge the economy.”
Click here to visit the Business Buzz home page.
