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Many CEOs expect to cut jobs

Still, most top executives say sales and capital investment will not decline, according to a survey.

June 19, 2008|From the Associated Press

WASHINGTON — Nearly one-third of the country's top executives expect to cut payrolls in the coming months, reflecting fallout from the housing bust as well as soaring energy prices.

At the same time, a survey by the Business Roundtable, released Wednesday, showed that most executives expect sales and capital investment to remain at current levels or even improve over the next six months.

That's consistent with expectations from the Federal Reserve and economists who say they think the fragile economy will strengthen this year and into next year -- even as the nation's unemployment rate, a lagging indicator of business health, rises.

As in the past, many employers won't want to increase hiring until they are sure the economy is back on a firm footing.

Businesses are "being very cautious, very cost-control oriented," said group Chairman Harold McGraw III, chief executive of McGraw-Hill Cos.

The survey found that 31% of chief executives said they expected to reduce employment at their companies in the coming months. That's up from 22% who said they expected to cut payrolls in a previous survey released in April. Seventy percent of executives in the new survey said they probably would hold payrolls at current levels or boost them. That's down from 78% in the old survey.

Every month this year, cautious employers have eliminated jobs. The unemployment rate rose to 5.5% in May from 5% in April, the biggest one-month rise in two decades.

In the survey, 91% said they expected their sales to hold steady or increase over the next six months, the same percentage as the old survey. Nine percent said they expected sales to go down -- also the same as the previous reading.

The Business Roundtable is an association of CEOs of major corporations, representing a combined workforce of more than 10 million employees and $4.5 trillion in annual revenue.

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