Optimism Among U.S. Chief Executives Fell in Second Quarter

Optimism among U.S. chief executive officers fell in the second quarter from a record high as fewer business leaders projected sales will climb, a survey showed.

The Business Roundtable’s economic outlook index decreased to 109.9 for the April through June period from a 113 reading in the previous three months that was the highest in data going back to 2002, the Washington-based group said today. Figures greater than 50 coincide with an economic expansion.

Eighty-seven percent of the 135 CEOs surveyed said they expected a gain in sales in the next six months, down from 92 percent in the first quarter, a sign that hiring and business investment may be slow to accelerate. A dip in capital spending will slow manufacturing, the industry that’s propelled the economic expansion.

“Oil and gas prices are still high,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc., said today on a conference call with reporters. “If they keep coming down I think that will be helpful.”

Elevated confidence among executives contrasts with pessimism among American consumers, whose spending makes up 70 percent of the world’s largest economy. The Bloomberg Consumer Comfort Index dipped to a nine-month low in May as gasoline prices climbed.

The average price of regular gasoline at the pump reached $3.99 a gallon on May 4, the highest since July 2008, according to AAA, the nation’s biggest auto group. The price dropped to $3.70 as of June 12, helping household confidence stabilize.

Roundtable’s Membership

The Business Roundtable’s survey was taken from May 16 to June 3. 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. Members include Chicago-based Boeing Co. (BA), Atlanta-based Coca-Cola Co. (KO) and Charlotte, North Carolina-based Bank of America Corp. (BAC)

Fifty-one percent of CEOs said they will add to payrolls, down from 52 percent in the first quarter. Some 61 percent said they plan to spend more on equipment, down from 62 percent.

The business leaders’ forecast is in line with the May employment data. Companies in the U.S. added 83,000 workers last month, the smallest gain since June 2010, according to Labor Department figures. Payrolls climbed by 251,000 workers in April.

The chief executives in the Business Roundtable survey forecast U.S. economic growth of 2.8 percent this year compared with the 2.9 percent projection in the previous survey. The 2011 projection is higher than the 2.5 percent median estimate of economists surveyed by Bloomberg News from June 1 to June 8.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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