WASHINGTON – Chief executives at the largest U.S. companies expect sales to keep growing in the next six months and also plan to step up hiring.
The Business Roundtable said Tuesday that 40 per cent of its member CEOs plan to hire more workers, up from 34 per cent in the third quarter. Nearly three-quarters project their sales will rise, roughly the same as the previous quarter.
The findings suggest that slowing growth overseas hasn’t caused large corporations to pull back on their hiring plans. That bodes well for the government’s report on November job gains, to be released Friday.
Still, the CEOs say they are less likely to invest in new facilities or equipment: 13 per cent say they plan to cut such spending, up from just 10 per cent in the previous quarter.
Randall Stephenson, CEO of AT&T Inc. and chairman of the Roundtable, said the survey results reflect an economy that is “expanding, but at a rate well below its potential, especially when you compare it to previous recoveries.”
Stephenson urged Congress to pass legislation this month that would extend a series of tax breaks for businesses, including a provision that lowers taxes for companies that invest in industrial equipment and other big-ticket items.
The Roundtable also plans to urge Congressional leaders in meetings this week to approve legislation that would give President Barack Obama broad authority to negotiate trade agreements with Europe and a group of Asian countries.
The survey was conducted between Oct. 22 and Nov. 12, and is based on 129 responses from the Roundtable’s 200 member CEOs.
Stephenson said that growth has been bolstered this year by the lack of any major budget fights between Congress and the White House. In previous years, budget battles have led to a government shutdown and brinksmanship over the government’s borrowing limit.
Still, the Roundtable forecasts the economy will grow only 2.4 per cent in 2015, roughly in line with the modest growth that has occurred since the recession ended in 2009. That’s more pessimistic than many Wall Street and business economists, who are projecting 3 per cent growth.
The economy expanded at a 4.6 per cent annual rate in the April-June quarter and 3.9 per cent in the July-September. That was the healthiest six months of growth since 2003.
But consumer spending rose only slightly in October and business investment in industrial machinery, computers and other equipment declined. The holiday shopping season is also off to a slow start. That’s raised concerns that economic growth could slow in the final three months of this year.
Still, hiring has been healthy this year, giving more Americans paychecks to spend. Employers have added an average of 229,000 jobs a month this year, up from 194,000 in 2013. That has helped lower the unemployment rate to 5.8 per cent, a six-year low, down from 7.2 per cent 12 months ago.