CEOs More Optimistic About Economy
Corporate executives’ confidence in the U.S. economy increased in the first quarter, marking the first such improvement in a year, the Conference Board reported Thursday.
Other reports found that the number of workers filing for unemployment benefits declined last week and that sales at wholesalers fell in February for the first time in 21 months.
The New York-based Conference Board’s measure of sentiment among chief executives of U.S. companies rose to 62 in the first quarter of 2005, compared with 61 in the fourth quarter of last year. A gauge of current conditions versus those of six months ago jumped to 65 from 61. Readings higher than 50 signal more positive than negative responses.
Fifty-nine percent of the executives surveyed said current economic conditions had improved, up from 53% in the prior quarter. Business leaders sounded a note of caution on rising healthcare costs, however, which they said might stifle hiring.
“Both CEOs and consumers continue to rate the economy as favorable, and expect little change over the next six months,” said Lynn Franco, director for the Conference Board’s Consumer Research Center. “As for the employment outlook, CEOs are not as bullish as last year, and cite healthcare costs as the No. 1 major obstacle to hiring new workers.”
The group’s gauge of CEOs’ expectations for the economy six months from now held at 60, the lowest since the first quarter of 2003. Six-month expectations among CEOs for their own industries rose to 61 from 60.
The research group’s survey found that about 44% of CEOs expect an employment increase in their industries, down from 50% a year ago. The proportion expecting a decline in hiring fell to 11% from 12% a year ago.
A separate Labor Depart report found that first-time applications for unemployment benefits fell by 19,000 in the week ended April 2 to 334,000.
The less-volatile four-week moving average of claims fell to 336,500 from 336,750. Economists surveyed by Bloomberg News had forecast a drop to 330,000 claims from the 350,000 initially reported the week before.
Wholesalers’ sales dropped 0.4% in February after a 0.3% rise, the Commerce Department said. Inventories increased 0.6% after a 1% gain.
Wholesalers sold less electrical equipment, farm products and petroleum in February, the Commerce Department’s report showed.
The ratio of inventories to 12-month sales increased to 1.18 months, the highest since January 2004. In January, wholesalers had enough supply on hand to last 1.17 months.
The ratio has increased since a record low of 1.14 months in April 2004.
