Bloomberg News

U.S. Chief Executives Less Confident on Economy, Survey Shows

November 07, 2011

Nov. 2 (Bloomberg) -- Confidence among U.S. chief executive officers declined in the third quarter to the lowest level in more than a year as their outlook for the world’s largest economy weakened, a private survey showed.

The Young Presidents’ Organization index of sentiment from July through September fell to 57.7, the weakest since the second quarter 2010, from 61.1 in the prior three months, according to the Dallas-based group. Readings greater than 50 show the outlook was more positive than negative in the survey, which began in July 2009.

Thirty percent of the executives said they expected the economy would improve in the next six months, down from 45 percent who gave that response three months ago. Some 25 percent projected the economic outlook will deteriorate, more than double the 12 percent in the prior survey.

“Most CEOs are confident in strength of their own organizations but are deeply concerned that other factors out of their control may hamper their companies’ performance,” Alan Zafran, managing partner of California-based investment adviser Luminous Capital LLC in Los Angeles, and a member of the Global One Chapter of YPO, said in a statement.

The U.S. expanded last quarter at the fastest pace in a year as Americans cut savings to boost purchases and companies stepped up investment in equipment and software. Payroll gains cooled in October and the jobless rate was 9.1 percent for a fourth consecutive month, according to the median forecast of economists surveyed by Bloomberg News before a Labor Department report this week, indicating the recovery remains too weak.

Sales Expectations

At the same time, CEOs were still optimistic about longer- term demand. Sixty-five percent of respondents said sales will increase in the coming 12 months, down 2.6 points from the prior quarter.

The CEOs reported they would hold employment steady at about the same level a year from now, and expand investment cautiously. The hiring index fell less than a point to 58.3 in the third quarter from the prior period, and the fixed- investment gauge dropped to 58.2 from 59.2.

The nonprofit service organization’s electronic survey was based on responses from 1,239 American CEOs and was conducted during the first two weeks of October.

--Editors: Vince Golle, Carlos Torres

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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