CEOs' optimism ebbs, suggesting US growth to stay muted

A view of the midtown Manhattan skyline. CEOs of some of the largest US companies have become less optimistic about their business prospects.
A view of the midtown Manhattan skyline. CEOs of some of the largest US companies have become less optimistic about their business prospects. PHOTO: BLOOMBERG

WASHINGTON (BLOOMBERG) - Chief executive officers of some of the largest US companies have become less optimistic about their business prospects, suggesting economic growth is likely to remain muted.

The Business Roundtable CEO Economic Outlook Index, a measure of expectations for revenue, capital spending and employment, declined to 69.6 in the third quarter from 73.5 in the previous quarter, according to a survey released on Monday (Sept 12). It was the first decline since the end of last year. Readings above 50 indicate economic expansion, and the gauge remains below its long-run average of 79.6.

Corporate leaders project the economy will expand 2.2 per cent in 2016, compared with the 2.1 per cent estimate in the previous survey. A measure of the sales outlook for the next six months dropped by 9.3 points to 98.3, the biggest decline in a year, as fewer respondents saw revenue increasing. Hiring expectations fell 3.4 points, while prospects for capital spending were little changed.

"It shows we're still travelling slowly on a soft road of weak economic growth as we have been for years," Mr Doug Oberhelman, the CEO of construction-equipment maker Caterpillar Inc, who serves as chairman of the Washington-based Business Roundtable, said on a conference call. While difficult to measure, there's also "always a degree of uncertainty" prior to a presidential election, he said.

The survey, with responses from 144 member CEOs, was conducted between Aug 3 and Aug 24. The Business Roundtable represents companies with US$7 trillion (S$9.5 trillion) in annual revenue and almost 16 million employees.