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Chief Executives in U.S. Less Confident on Sales, Employment

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Aug. 4 (Bloomberg) -- Confidence among U.S. chief executive officers waned at the start of the third quarter as business leaders anticipated smaller gains in sales, employment and equipment purchases, a private survey showed.

The Young Presidents’ Organization gauge of sentiment dropped to 61.1 in July from April’s record-high 64.1 reading, according to the Dallas-based group. Figures greater than 50 shows the executives’ outlook was more positive than negative.

“CEOs are concerned that the slower growth registered in the first half of this year might continue through year-end,” YPO member Dave Maney, chairman at Headwaters MB, a Denver-based investment bank, said in a statement. “The relatively modest decline would indicate that CEOs have grown cautious, rather than pessimistic.”

The world’s largest economy cooled in the first six months of 2011 as higher food and fuel costs strapped consumers facing flagging job growth. Absent bigger income gains later this year, a pickup in the household spending that accounts for 70 percent of the economy may fail to materialize.

“The negative shift in CEO sentiment is not surprising in light of second-quarter events, which include the run-up in gasoline prices and the debt-ceiling gridlock in Washington,” Stephen Slifer, chief economist at NumberNomics and YPO Global Pulse economic adviser, said in a statement.

Forty-eight percent of respondents said sales will increase in the coming 12 months, while 21 percent anticipate demand will shrink, the nonprofit service organization’s survey showed.

Hiring Outlook

Hiring will pick up by July of next year at about 36 percent of businesses, down from the 42 percent of respondents who said they planned to boost employment in the prior period. Almost 5 percent said they anticipate trimming payrolls throughout the year.

The economy probably failed to add enough jobs in July to reduce unemployment which held at 9.2 percent, according to the median estimate of economists in a Bloomberg News survey ahead of tomorrow’s Labor Department report. Private payrolls increased by 57,000 in June, the smallest gain since May 2010.

The fixed-investment index dropped to 59.2 in July from a record-high 61.3 reading, according to the YPO survey, with 41 percent of CEOs planning to boost capital spending. Twenty-seven percent of executives in the construction industry said they plan to increase investment, down from 45 percent one quarter ago.

The quarterly survey, conducted during the first two weeks of July, received responses from 1,045 U.S. CEOs.

To contact the reporter on this story: Alex Kowalski at

To contact the editor responsible for this story: Christopher Wellisz at

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