CEOs Expect to Add Workers

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June 3, 2004 -- With economic conditions continuing to strengthen, a growing number of chief executives plan on hiring workers by the end of the year, according to a survey conducted by the Business Roundtable.

Of the 116 CEOs surveyed, 38 percent said they expect to increase employment over the next six months, up from 33 percent in March. Of the remainder, 43 percent expect no change in hiring and 19 percent expect to decrease their work force, down from 22 percent who projected cuts in March.

The Business Roundtable, the main association of chief executives in the United States, also found that 88 percent see sales increasing in the next six months. Only 4 percent anticipate a decline.

Spending should grow as well, with 83 percent expecting either no change or an increase in capital spending.

"Along with a continued rise in capital spending and a high level of sales, CEOs expect steady employment gains over the next six months," said Hank McKinnel, chairman of the association and chairman and CEO of Pfizer, Inc. "Our economy appears to have reached a self-sustaining phase of expansion."

The Roundtable's CEO Economic Outlook Index, a composite of sales, spending and hiring sentiment, hit its highest level since the group started conducting the survey in November 2002. On average, the CEOs surveyed expect real GDP to grow 3.7 percent during the year, in line with their March projection.

The rosy outlook comes on the heals of two straight months of strong employment growth, with non-farm payrolls jumping a total of 625,000 between April and March. More good news is expected on Friday when May numbers are announced. The consensus of a Barron's survey forecasts a gain of 230,000 in payroll employment.

Matt Quinn

Matt Quinn contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.