Stagnant sales forecast dampens CEOs’ taste for spending

Fewer chief executive officers in the U.S. said they plan to increase capital spending in the next six months as the sales outlook was little changed, a survey showed.

The Business Roundtable’s economic outlook index — which measures expectations of sales, investment and employment — fell to 85.1 in the fourth quarter, the lowest in a year, from 86.4, the Washington-based trade group said Tuesday. Figures greater than 50 are consistent with economic expansion, and the index is still above its long-term average level of 80.3.

Corporate leaders project the world’s biggest economy will expand 2.4 percent next year, unchanged from 2014 expectations. The forecast highlights the need for lawmakers to take up tax and regulatory overhauls, the group said.

“The economy ended the year essentially where it started performing below its potential,” Randall Stephenson, chairman of Business Roundtable and chief executive officer of AT&T Inc., said in a statement.

Thirty-six percent of re-

spondents expect an increase in business investment in the next six months, down from the 39 percent who said so in the third quarter.

The share projecting an increase in sales over the same period was little changed at 74 percent, held back in part by slower overseas economies.

“What you’re seeing happen in Europe and Asia is suppressing people’s views of their sales over the coming six months,” Stephenson said during a conference call. “Asia has really slowed considerably, and so that is obviously weighing on people’s sales forecasts.”

Hiring plans were a bright spot. Forty percent of respondents said they will add to payrolls in the next six months, up from 34 percent in the third quarter.

About four of 10 executives said regulatory costs were the biggest burden on companies, the same as last year, followed by labor.

The share saying health care was a major expense dropped to 11 percent this year from 21 percent in the fourth quarter of 2013, the last time the question was asked.

The survey, completed between Oct. 22 and Nov. 12, tabulated the responses of 129 CEOs who belong to the Business Roundtable.

The group’s members represent companies that have a combined workforce of almost 16 million employees, with annual revenue of $7.2 trillion and more than a quarter of the total value of the U.S. stock market.