Confidence among U.S. CEOs improved in the third quarter, after nine straight quarters of decline, according to Business Roundtable’s quarterly business sentiment survey. Still, optimism among the nation’s chief executives remains well below the historical average, as the COVID-19 pandemic continues to take its toll.
The group’s economic outlook index increased by 29.7 points in the third quarter to 64 — still far below the index’s historical average of 81.7.
In a press release, the business group said the findings show an improvement in the economy, but CEO plans “remain fragile” and business leaders are especially concerned about the pandemic’s impact on small businesses. Business Roundtable said executives’ outlook increased, in part, because of policymakers’ initial relief efforts and urged Congress to pass another stimulus package.
“Further major support from the federal government is necessary to prevent economic recovery from being derailed. Failure to act, along with the lack of comprehensive and coordinated efforts to stop the spread of COVID-19, would impose long term damage on the U.S. economy, hurting most the workers and small businesses least able to absorb the blow,” said Joshua Bolten, president and CEO of Business Roundtable in a statement.
This quarter, the survey asked CEOs when business conditions for their company will return to pre-pandemic levels. Twenty-four percent of CEOs said business conditions never declined, have recovered or will likely recover by the end of the year. Forty-percent said they expect business conditions to recover next year and 36% said they expect business conditions to recover in 2022 or later.
“A strong and sustainable economic recovery for America is dependent on defeating COVID-19,” said Doug McMillon, chairman and CEO of Walmart and chairman of Business Roundtable. “As CEOs of America’s largest employers continue to work with lawmakers and public health officials at all levels of government to ensure safe reopenings across the country, Business Roundtable urges the Administration and Congress to come back to the negotiating table and pass more legislation to further ease the economic challenges American workers, small businesses and suppliers are experiencing.”
The Business Roundtable index showed the executives’ plans for hiring, capital investment and sales all increased in the third quarter. Thirty-one percent of CEOs said they planned to increase hiring over the next six months, compared to 22% in the second quarter. Of the 149 CEOs surveyed in Q3, 32% said they expect to increase capital investment over the next six months — up from 18% in the previous quarter. Fifty-seven percent of executives said they expect sales to increase over the same time period, up from 45% in the second quarter.
In their third estimate of 2020 U.S. GDP growth, CEOs projected a 2.4% contraction for the year — a 1.4 percentage point increase from last quarter’s estimate. Business Roundtable conducted the survey between Aug. 31 and Sept.16.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.