U.S. chief executives' outlook on the economy improved in the fourth quarter, although most still are not ready to step up hiring or increase capital spending, according to a Business Roundtable survey released on Tuesday.
The majority of respondents -- 68 percent -- expect their companies' sales to rise over the next six months. However, that did not translate to a readiness to invest, with just 40 percent saying they expected to boost U.S. capital spending over the next six months and 31 percent saying they expect to cut U.S. jobs.
While there are signs of improvement, notably in sales and capital expenditures, it still will take time for these gains to translate into more jobs and higher employment, said Ivan Seidenberg, CEO of U.S. telecommunications provider Verizon Communications Inc , who serves as chairman of the Roundtable.
Rising capital spending tends to be a predictor of hiring, as companies must invest in equipment before bringing back staff, Seidenberg said. Still, CEOs will need more evidence the economy has recovered from the worst downturn since the Great Depression before they will be ready to hire, he said.
It really is a question of sustainability. A couple of more quarters of demand at these rates and we'll start to turn the corner, hopefully, Seidenberg told reporters.
CEOS FORECAST GDP GROWTH
The CEO Economic Outlook index snapped back into positive territory, with a reading of 71.5, up from 44.9 in the third quarter and the highest reading since the third quarter of 2008. Any number above 50 indicates that CEOs expect growth.
While CEOs view of the economy has improved, many remain skittish about the economic outlook. Blue chip industrial 3M Co told investors on Tuesday it expected the recovery to be patchy and slow.
The group also surveyed its members about what costs they were most worried about. The largest proportion, 33 percent, were concerned about the cost of health care.
Seidenberg said CEOs were concerned the current effort to reform the U.S. health care system making its way through the U.S. Senate could be excessively costly.
When it comes to the controlling of the costs question, CEOs are very concerned about ... whether or not there are enough dynamics in this legislation that will actually drive to a more efficient market and lower costs, Seidenberg said.
The 111 CEOs surveyed expect real U.S. gross domestic product to rise 1.9 percent next year.
Business Roundtable member companies, who were surveyed November 5 through November 30, employ more than 12 million people and collectively generate nearly $6 trillion in annual revenue.
For a graphic on the U.S. employment outlook click http://link.reuters.com/hup55g
(Reporting by Scott Malone; editing by Matthew Lewis and Andre Grenon)