Nearly three-quarters of CEOs in the Business Roundtable expect to cut workers in the next six months as sales sag, a survey showed Tuesday, suggesting further deterioration in the job market is likely at least through the end of the year.
Seventy-one percent of CEOs said they expect to cut workers in the next six months, up from 60% from November, when the quarterly survey was last conducted, and the most since the survey began at the end of 2002, the Business Roundtable said. Twenty-one percent expect to keep payrolls unchanged, while 7% said they plan to add workers.
The survey of 100 CEOs of the nation's largest companies was conducted March 16-March 27.
The grim outlook for the job market comes as CEOs anticipate lower sales and business investment the next six months. Sixty-seven percent said they expect their sales to drop, up from 45% in the last survey, while 66% said their company will likely cut spending on equipment and other capital goods, up from 52%.
The CEOs on average expect U.S. gross domestic product, the widest measure of the nation's economic output, to fall 1.9% in 2009 after rising 1.1% in 2008. If realized, it would be the first annual drop in GDP since 1991 and the biggest since 1982, when the economy was in a deep recession. In November, the CEOs expected GDP to be flat in 2009.
The Business Roundtable said a composite index of employment, sales and capital spending stood at -5% in March, down from 16.5% in November and 79.5% a year ago. Numbers below 50 point to a contraction in the overall economy.
Business Roundtable Chairman Harold McGraw, President and CEO of The McGraw-Hill Companies, said while the numbers represent the "significant pressure on American businesses," he said he still expects a turnaround in the economy toward the end of the year.
Strong government action in the USA and abroad to unclog lending markets and prop up the global economy are already having some effect, such as pushing mortgage rates to record lows and boosting stock prices, he noted.
"These are going to be our darkest hours," McGraw told reporters. "We are going to see some improvement" going forward.
The report comes a few days after the government announced that employers cut 663,000 jobs in March and reduced workers' hours to record lows. The unemployment rate was 8.5% last month, up from 8.1% in February and the highest in more than a quarter-century.
Employment tends to lag the rest of the economy when climbing out of recessions. Employers wait to see evidence the economy is truly on the mend before hiring; instead they often increase hours for existing employees or hire temporary help.
The USA has been in a recession since December 2007.