U.S. CEO eco­nomic fore­cast re­mains near 3-year low

Financial Mirror (Cyprus) - - FRONT PAGE -

Chief ex­ec­u­tive of­fi­cers of large Amer­i­can com­pa­nies are not be­com­ing more up­beat on the U.S. econ­omy in 2016 than they were in the fourth quar­ter of 2015. The Busi­ness Roundtable CEO Eco­nomic Out­look In­dex rose slightly from 67.5 in the fourth quar­ter of 2015 to 69.4 this year. The long-term av­er­age for the in­dex is 79.9.

While not ex­actly a ring­ing en­dorse­ment of the di­rec­tion of the U.S. econ­omy, the slim im­prove­ment does bring to an end three con­sec­u­tive quar­ters of a de­clin­ing in­dex. The fig­ure is cal­cu­lated based on sales, hir­ing and cap­i­tal spend­ing fore­casts for the next six months.

Ac­cord­ing to the fourth-quar­ter data, over the next six months, CEO ex­pec­ta­tions for sales in­creased by 8.5 points and their plans for cap­i­tal ex­pen­di­tures in­creased by 7.1 points. The group’s se­cond GDP fore­cast for 2016 in­di­cated ex­pected growth of 2.2%, down from the prior es­ti­mate of 2.4%.

Hir­ing plans fell by nearly 10 points com­pared with the prior quar­ter. In the fourth quar­ter of last year, some 35% of CEOs had plans to in­crease hir­ing; that num­ber has slipped to 29%, while the per­cent­age ex­pect­ing to re­duce em­ployee counts rose from 34% to 38%.

Doug Oberhelman, chair­man of Busi­ness Roundtable and chair­man and CEO of Cater­pil­lar, said: “Mixed ex­pec­ta­tions for near-term sales, in­vest­ment, hir­ing and growth point to an econ­omy that con­tin­ues to lack mo­men­tum. Th­ese re­sults only re­in­force the need for Congress and the Ad­min­is­tra­tion to act this year to en­act poli­cies that boost job cre­ation and eco­nomic growth, such as quickly rat­i­fy­ing the TPP [Trans-Pa­cific Part­ner­ship], mod­ernising Amer­ica’s out­dated busi­ness tax sys­tem, and em­brac­ing a smart reg­u­la­tory en­vi­ron­ment.”

The first quar­ter 2016 sur­vey was com­pleted be­tween Fe­bru­ary 10 and March 2. Re­sponses were re­ceived from 141 mem­ber CEOs. The data are used to cre­ate the Busi­ness Roundtable CEO Eco­nomic Out­look In­dex and sub-in­dexes for sales, capex and hir­ing ex­pec­ta­tions, where read­ings at 50 or above in­di­cate an eco­nomic ex­pan­sion and read­ings below 50 in­di­cate an eco­nomic con­trac­tion. The sur­vey has been con­ducted quar­terly since the fourth quar­ter of 2002.

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