Fewer chief executive officers in the U.S. project a pickup in sales and capital spending in the next six months as the budget debate in Washington puts hiring plans on hold, a survey showed.
The Business Roundtable’s economic outlook index dropped to 79.1 in the third quarter from a one-year high of 84.3 in the previous three months, the Washington-based trade group said today. Measures greater than 50 are consistent with economic expansion, and the long-term average for the gauge is 79.3.
“CEO expectations for the next six months remain essentially the same with some downside bias,” said Jim McNerney, chairman of the Business Roundtable and CEO of Boeing Co. “While U.S. business performance remains strong, as evidenced by robust recovery in the automotive sector, business leaders still see headwinds preventing a more sustained, robust recovery.”
Seventy-one percent of respondents project an increase in sales in the next six months, down from 78% who said so in the second quarter. The share expecting increased business investment in the next six months fell to 27% in the third quarter from 37% in the previous three months.
Thirty-two percent of corporate leaders plan to boost payrolls, unchanged from the second quarter. Half of the CEOs surveyed said the disagreement over the 2014 U.S. government budget and the debt ceiling was having a negative impact on hiring plans.
“The economy isn’t as robust as we’d like it to be,” McNerney said on a conference call. Failure to reach an agreement on the budget “would have a serious impact on economic growth,” he said.
The survey, completed between Aug. 16 and Sept. 6, tabulated the responses of 134 CEOs who belong to the Business Roundtable. The group’s members represent companies with a combined workforce of more than 16 million employees and about $7.4 trillion in annual revenue.