American CEOs More Optimistic in Hiring as the Economy Grows

The Business Roundtable revealed the results of its April to June survey on Wednesday. The quarterly survey said that 32% of its members “expect to expand payrolls” in six months’ time. In the previous survey that was conducted in January to March only 29% responded similarly. American CEOs are now more optimistic in hiring.

In addition, the survey determined that 78% of the Business Roundtable members expect sales increase. In the previous quarter it was at 72%. This is partly attributed to the fact that consumers chose to keep spending on cars and other goods despite the elevated Social Security taxes.

The Business Roundtable

CEOs of 200 of the biggest US corporations form The Business Roundtable. The latest survey data are based on 141 responses gathered from May 13 to May 31 on questions regarding capital spending, hiring, and sales. The resulting index is used to gauge the economic outlook, referred to as the CEO Economic Outlook Index. This index increased from 81 in March to the present level of 84.3. In December 2012, the index was at 65.6. For the past 11 years American CEOs have been participating in this particular survey.

Optimism is catching on

Chief executives in the United States say that they are more optimistic about hiring. The heads of the largest American companies have a positive outlook about sales for half a year and they are planning to add workers in the fold. Nevertheless, most of the chief executives did not expect growth acceleration. The growth forecast of 2.2% for 2013 is slightly increased from 2.1%.

A separate survey carried out by the National Federation of Independent Business that was released on Tuesday, revealed that the optimism has spread to small business owners. The small business optimism index is up at 94.4 for the second straight month, the second highest level reached since the recession started in 2007.

A better outlook

In the first three months of 2013, the US economy grew at a solid 2.4% annual rate and consumer spending is fastest now that it has ever been in the past two years. In the month of May, 175,000 new jobs were added to the fold, almost matching the average gain in the past year. More Americans are also more confident now that they would be able to find a job.

The road to recovery

According to the Chairman of the Business Roundtable, Boeing CEO Jim McNerney, for the CEOs the economy is still on a slow road to recovery. McNerney added that there is however no denying the modest economic growth as reflected by the improved sales outlook. Other factors contributing to better sales forecast are the high growth in the emerging markets elsewhere particularly in Asian economies.

However, around 26% of the CEOs are expecting to cut jobs, a one point jump from the last survey. The Business Roundtable identified the political uncertainty and the US debt crisis as two of the factors that hold the economy back.

Call for tax reform

McNerney along with other CEOs have called for reform in the corporate tax system. They believe that the rates are too high if the companies are to compete at a global scale. There is a necessity to fit into the global tax environment at this time, they insisted. The last reform to the US corporate tax system was made during the Reagan administration.

Photo Credit: Business Roundtable Chairman Jim McNerney of Boeing