CEO outlook index up from record low but still weak

An index measuring the expectations of 95 CEOs from among the nation's largest companies showed an improved outlook from last quarter's record low, but many still expect declines in sales, jobs and capital spending.

The Business Roundtable said Tuesday its CEO outlook index rose to 18.5 in June from a minus 5 in March, the lowest level since the survey began in 2002. A reading below 50 is consistent with a shrinking economy.

About half the chief executives surveyed said they still expect drops in their companies' sales, capital spending and American employment in the next six months.

The Business Roundtable's 160 members include Caterpillar CAT, Eli Lilly LLY, Goldman Sachs GS and FedEx FDX.

"We don't see continued free fall," Ivan Seidenberg, the group's chairman and CEO of Verizon CommunicationsVZ, said on a conference call with reporters. "But nobody's ready to suggest they're going to begin hiring."

The CEOs also expect the nation's gross domestic product to shrink 2.1% this year, down from their previous estimate of 1.9%. GDP measures the value of all goods and services produced within the U.S. and is the broadest measure of the economy's health.

The economy shrank at an annual rate of 5.7% in the first quarter and 6.1% in the last three months of last year, the biggest six-month decline in more than 50 years.

Many economists expect the GDP shrank between 2 and 3% in the quarter ending in June, and that it may grow slightly later this summer.

Those CEOs who expected their American payrolls to hold steady more than doubled to 45% in June, from 21% last quarter. Those forecasting job losses slid to 49% from 71%.

The CEOs who said they intended to hire actually inched lower in June to 6% from 7% in March.

Meanwhile, the percentage of CEOs expecting sales to fall dropped to 46% in June from 67% in the first quarter. Those expecting higher sales rose to 34% from 24%.