US CEO sentiment at three-year high is good omen for economy

[WASHINGTON] Chief executive officers of some of the largest US companies are becoming even more sanguine about sales and spending, a good omen for the economy after a lackluster first-quarter expansion, according to a quarterly survey from the Business Roundtable released Tuesday.

Business Roundtable's CEO Economic Outlook Index (2Q) Main index gained 0.6 point to 93.9, highest since 2Q 2014 Measure of expected capital spending rose 4.6 points to 87.2 Sales outlook rose 0.5 point to 124.3; employment gauge fell 3.3 points to 70.3.

Prospects for legislation that will reduce taxes and spur growth continue to hearten business leaders, who had boosted their confidence in the economy following President Donald Trump's November election victory.

While companies see sales gaining and increasingly plan capital investments, a dwindling pool of skilled and experienced labour for hire may be restraining efforts to boost headcounts.

The CEOs estimate the economy will grow two per cent this year, down from 2.2 per cent in the previous survey and slightly below the median forecast in a Bloomberg survey.

When asked how their company's capital spending will change in the next six months, 43 per cent of respondents said increase, 52 per cent said no change, six per cent said decrease Historical average is 80 for main index Survey had responses from 148 CEOs and was conducted from May 3 to May 24; readings above 50 indicate economic expansion Washington-based Business Roundtable represents companies with almost 15 million employees, more than US$6 trillion in annual revenue.

BLOOMBERG