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CEOs see a healthy business climate

A Business Roundtable survey indicated that most expect good sales, capital investment and hiring.

WASHINGTON - The country's top corporate executives foresee pretty good business prospects even as the economy gets squeezed by a housing collapse, a credit crunch, Wall Street turmoil, and high energy prices.

A Business Roundtable survey released yesterday showed that most executives expect sales, capital investment and hiring to remain at current levels or even improve slightly in the coming months.

While the economy's problems have caused consumer confidence to tank, the corporate executives' assessment is that the business climate remains generally healthy despite the strains.

The economy logged its fastest growth in four years during the third quarter: 3.9 percent. But growth is expected to slow to just 1.5 percent or less in the October-to-December period.

In the survey, 87 percent of chief executive officers said they expected their sales to hold steady or increase over the next six months. That is down only slightly from 88 percent in the previous survey in September.

On the hiring front, 78 percent said they expected to hold payrolls at current levels or boost them. That is up a bit from 74 percent in the earlier survey.

Meanwhile, 86 percent said they would hold capital investment steady or increase it. That compared with 85 percent in the previous survey.

One of the reasons behind the executives' outlook is that they expect overseas demand for their products and services to remain strong, said the group's chairman, Harold McGraw III, president and chief executive officer of the McGraw-Hill Cos. Inc. Another reason: Executives are not seeing a retrenchment by U.S. consumers, McGraw said.

Costs for health care and energy topped executives' concerns about costs.

"For the last four consecutive years, health-care costs, which impact virtually all Roundtable companies, have been cited as the top pressure. But now, with oil approaching $100 a barrel, energy costs have risen to the top concern in CEOs' minds," McGraw said.

The executives said they expected the economy to grow 2.1 percent for all of next year, which would be less growth than is forecast for this year.

The White House and the Federal Reserve have lowered their forecasts for economic growth next year because of fallout from the housing and credit markets.

The meltdown in the mortgage and credit markets has left millions of people at risk of losing their homes, made banks and other financial players take huge losses, and forced some lenders out of business.

The Business Roundtable is a group of CEOs of major corporations representing a combined workforce of more than 10 million employees and $4.5 trillion in annual revenue. The quarterly survey, conducted Nov. 5 through 20, was based on responses from 105 of the group's 160 member companies.

And the Executives Said . . .

A survey of leaders of top U.S. businesses indicates a small improvement in their expectations for the economy over the next six months. Key findings:


Increase    Change    Decrease

How do you expect your

company's sales to change

in the next six months?             70%          17%          13%

How do you expect your

company's U.S. capital spending

to change in the next six months?      35%          51%          14%

How do you expect your

company's U.S. employment to

change in the next six months?         33%          45%          22%

SOURCE: Business Roundtable's fourth-quarter 2007 CEO Economic Outlook Survey