Confidence among U.S. chief executive officers declined in the second quarter as more business leaders said economic conditions will worsen in the next six months, a private survey showed.
The Young Presidents’ Organization sentiment index fell to 60 in the second quarter from 65.1 in previous three months, the largest decline since the survey began in 2009. Readings greater than 50 show the outlook was more positive than negative.
“High gas prices, ongoing woes in Europe, and reduced growth in Asia, China in particular, no doubt dampened CEO optimism in the latest survey,” Stephen Slifer, YPO Global Pulse economic adviser and chief economist at NumberNomics, said in a statement. “The results seem to be pointing toward slower growth ahead and not a global contraction.”
Thirty-seven percent of executives surveyed said the current economy has improved from six months ago, down from 60 percent who said so in the first quarter. Eighteen percent said the economy will worsen, up from 7 percent in the prior survey.
Gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate in the second quarter, according to Commerce Department data. Household purchases, which account for about 70 percent of the economy, grew at the slowest pace in a year. Forty percent of chief executives in the YPO survey saw conditions improving in the next six months, down from 56 percent.
The Dallas-based group’s outlooks for sales and hiring also cooled. The gauge of sales in the coming 12 months fell to 66.7 last quarter from 71.
The YPO’s employment index dropped in the second quarter to 59.1 from 61.6 the previous three months. A measure of capital spending declined four points from 63 to 59.
Companies hired more workers than forecast in July, a Labor Department report showed last week. The unemployment rate, derived from a separate survey, rose to 8.3 percent.
The U.S. recorded the biggest drop in the latest survey among the nine regions of the world. The YPO’s Global Confidence Index decreased 4.1 points to 59.7. Sentiment among executives in the European Union, the lowest in the global survey, dropped 2.8 points to 52.
The nonprofit service organization’s findings for the U.S. were based on responses from 1,659 global chief executives, including 664 in the U.S., to an electronic survey conducted during the first two weeks of July.