CEOs less optimistic on outlook for sales and hiring

Chief executives in the U.S. turned less optimistic in the third quarter as fewer projected that sales and hiring would improve, a survey showed Tuesday.

The Business Roundtable’s economic outlook index fell to 86 in the July-to-September period, the first decrease since the beginning of 2009 when the gauge dropped to a record low of minus 5, the Washington-based group said. Readings higher than 50 indicate economic expansion. The gauge fell from a second-quarter reading of 94.6, the highest since 2006.

Sixty-six percent of respondents said they expected sales to grow in the next six months, down from 79% in the second quarter, while 31% said they would add to payrolls, a decrease of 8 percentage points. At the same time, companies are taking the opportunity to invest in new equipment, signaling that capital spending will be a source of strength for the U.S. economy.

“This is, and will continue to be, somewhat of a long and uneven recovery,” said Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive of Verizon Communications Inc. “We’re not seeing a lot of major momentum develop here.”

Forty-nine percent of executives said they planned to spend more on equipment, up from 43%, the survey showed.

The executives reduced their economic growth forecasts to 1.9% for 2010 from 2.7% in the previous survey. That compares with the 2.7% median estimate of economists surveyed Sept. 1-8 by Bloomberg News.

“We’re not seeing business fundamentals deteriorate to the point where we would be concerned in a major way about a double dip,” or another recession, Seidenberg said.

The Business Roundtable survey, taken Sept. 1-21, included the responses of 125 CEOs.