American CEOs More Optimistic on Job Front, Gloomier on Spending

U.S. chief executive officers are more pessimistic about their spending plans and the outlook for the economy, but are more bullish on their hiring prospects, according to a quarterly survey from the Business Roundtable released on Tuesday.

Of the 129 CEOs who responded to the survey, 36 percent said they expected to increase their capital spending in the next six months, down from 39 percent in the third quarter and an eight-point drop from 44 percent in the second quarter.

The Business Roundtable CEO Economic Outlook Index - a composite index of CEO expectations for the next six months of sales, capital spending and employment - dropped slightly to 85.1 from 86.4 in the third quarter. The index is above the long-term average of 80.3, but more than 10 points below the second quarter when it stood at 95.4.

CEOs said they expected 2015 U.S. economic growth of 2.4 percent, the same as their forecast for 2014.

"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 release accompanying the survey results.

Stephenson added that the U.S. Congress needs to extend a series of temporary tax breaks, including credits related to research and development, plus approve a trade promotion authority that would encourage business investment to help the economy grow and create more jobs.

"We are constantly asking ourselves what would get the economy" on a firmer footing, Stephenson said on a conference call with reporters. "You really don't have to look further than capital spending."

In the survey, 74 percent of respondents said they expected sales to increase in the next six months, a slight increase from 73 percent in the previous quarter.

But 40 percent said they expected to hire more people over the next half year, up from 34 percent in the last quarter but still below the 43 percent of respondents who said in the second quarter they expected to add jobs.

In the fourth quarter the survey asks CEOs what their top cost pressures are and this year 39 percent said regulatory costs were their leading concern over the next six months, followed by labor and healthcare costs. Regulatory costs also topped the list for CEOs in the previous two years. (Reporting By Nick Carey; Editing by Jonathan Oatis)