(Bloomberg News) Optimism among U.S. chief executive officers surpassed the highest level reached before the recession as more business leaders projected increased sales, investment and hiring, a survey showed.
The Business Roundtable's economic outlook index increased to 113 in the first quarter, the highest point since records began in 2002, from 101 in the previous three months, the Washington-based group said today. Readings greater than 50 coincide with an economic expansion. The previous peak was 104 in the first three months of 2005.
"Companies have given strong signals about their willingness to expand," Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York- based Verizon Communications Inc., said in a press conference. "As we keep a steady flow of capital investment, we'll certainly see sales forecasts go up, and as we do that we'll start to see hiring."
None of the 142 CEOs surveyed said they expected a decline in sales in the next six months, and 92% projected an increase, paving the way for more hiring and investment in equipment. A gain in capital spending plans points to further strength in manufacturing, the industry that's propelled the economic expansion.
The share of respondents projecting increased sales in the next six months rose 12 percentage points from the fourth quarter.
Fifty-two% of CEOs said they will add to payrolls, up from 45% in the fourth quarter and the largest share on record. Some 62% of executives said they plan to spend more on equipment, up from 59%, the survey showed.
The business leaders' forecast supports March employment data. Companies in the U.S. added 201,000 workers this month after a revised 208,000 gain in February, according to figures from ADP Employer Services released today. Economists project a Labor Department report in two days will show businesses employed 210,000 new workers in March and the jobless rate held 8.9%.
The chief executives in the Roundtable survey forecast U.S. economic growth of 2.9% this year compared with the 2.5% projection in the previous survey. The 2011 projection is comparable to the 3% median estimate of economists surveyed by Bloomberg News from March 4-10.
"Both anecdotally and through the survey, the CEOs are looking at their forecasts and seeing demand pick up," Seidenberg said. "That's partly because GDP is little higher than it was at this time last year and consumer spending looks a little stronger, so people are willing to deploy capital and replenish inventories."
The Business Roundtable's survey was taken from Feb. 28 to March 18. The group is an association of CEOs of corporations representing a combined workforce of more than 13 million employees and almost $6 trillion in annual revenue.