- Business Roundtable index shows first drop in three quarters
- Gauge of sales in U.S. prospects declines by most in a year
Chief executive officers of some of the largest U.S. companies have become less optimistic about their business prospects, suggesting economic growth is likely to remain muted.
The Business Roundtable CEO Economic Outlook Index, a measure of expectations for revenue, capital spending and employment, declined to 69.6 in the third quarter from 73.5 in the previous quarter, according to a survey released Monday. It was the first decline since the end of last year. Readings above 50 indicate economic expansion, and the gauge remains below its long-run average of 79.6.
Corporate leaders project the economy will expand 2.2 percent in 2016, compared with the 2.1 percent estimate in the previous survey. A measure of the sales outlook for the next six months dropped by 9.3 points to 98.3, the biggest decline in a year, as fewer respondents saw revenue increasing. Hiring expectations fell 3.4 points, while prospects for capital spending were little changed.
“It shows we’re still traveling slowly on a soft road of weak economic growth as we have been for years,” Doug Oberhelman, the CEO of construction-equipment maker Caterpillar Inc., who serves as chairman of the Washington-based Business Roundtable, said on a conference call. While difficult to measure, there’s also “always a degree of uncertainty” prior to a presidential election, he said.
The survey, with responses from 144 member CEOs, was conducted between Aug. 3 and Aug. 24. The Business Roundtable represents companies with $7 trillion in annual revenue and almost 16 million employees.