Dive Brief:
- CEOs at large U.S. corporations have reduced plans for hiring based on forecasts that the economy will cool while avoiding a downturn, the Business Roundtable said.
- During the next six months, 32% of CEOs plan to trim payroll growth, an increase of five percentage points since the end of the second quarter, the Business Roundtable found in its Q3 survey completed this month. The proportion of CEOs who intend to increase hiring fell to 27% from 33% in Q2.
- “With an economy that is slowing, not stalling, CEOs continue to moderate their plans and expectations for the next six months, particularly in employment,” Business Roundtable CEO Joshua Bolten said in a statement.
Dive Insight:
The payroll plans by chief executives align with economists’ forecasts that employment and economic growth will weaken but persist in coming months, belying predictions earlier this year of recession.
The probability of a downturn has fallen to 48% from 56% in July, according to a survey this month of more than 50 economists at large U.S. companies by Wolters Kluwer. At the same time, the so-called Blue Chip Economic Indicator panel predicts unemployment will rise by mid-2024 to 4.5% from 3.8% in August.
CEOs project 2.1% economic growth for this year, an increase from 1.5% in its Q2 survey, the Business Roundtable found in its Q3 survey of 143 chief executives.
Since June Federal Reserve economists have upgraded their forecast for the economy from mild recession to slow growth.
Their turnabout — along with similar revisions by many private-sector economists — has bolstered predictions that the most aggressive monetary tightening in four decades will achieve a “soft landing,” or curb high inflation without triggering widespread layoffs and an economic contraction.
“Economists and market watchers in the United States are starting to take seriously the possibility of a domestic ‘soft landing’ buoyed by labor market resilience, moderating inflation and gently slowing final demand growth,” EY said in a report on a CEO survey in July.
Among CEOs at companies with revenues exceeding $5 billion, 53% say that the prospects for their companies’ performance has improved since the beginning of the year, EY said.
Small business owners hold a gloomier view of the labor market and economy, according to data from the National Federation of Independent Business. Two out of five small businesses said they could not fill job openings, and their expectations for business conditions during the next six months persist at a level usually associated with a downturn, the NFIB said Tuesday.
Fed officials plan to release projections for economic growth, unemployment and the federal funds rate after a two-day policy meeting ending Sept. 20.
