Companies in U.S. More Upbeat on Sales Than Jobs, Surveys Show

Dec. 8 (Bloomberg) -- Chief executive officers, supply managers and small business leaders in the U.S. said a pickup in sales next year will not lead to a surge in hiring, surveys showed.

Three times as many company chiefs anticipate sales will grow over the next six months than project payrolls will climb, according to a survey by the Washington-based Business Roundtable. A poll by the Institute for Supply Management found service companies, which account for almost 90 percent of the economy, forecast additional job cuts in 2010.

“These results are in line with an anticipated slow and uneven recovery,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc., said on a conference call with reporters.

The reports indicate it will take time for the economy to recover the 7.2 million jobs lost since the recession began in December 2007, the worst employment slump in the post-World War II era. President Barack Obama today proposed new spending on the nation’s transportation system and tax credits to spur hiring by small businesses among a second round of initiatives aimed at cutting the jobless rate.

Sixty-eight percent of chief executive officers this quarter said they expect sales to grow, compared with 51 percent in the previous three months, the report from the Business Roundtable showed. The group is an association of CEOs of corporations representing a combined workforce of 12 million employees and almost $6 trillion in annual revenue. Nineteen percent said they planned on increasing headcount.

Purchasing Managers

Factory purchasing managers anticipated sales will grow 5.7 percent next year, while their counterparts at service providers projected a 1.3 percent gain, according to a semiannual forecast from members of the Tempe, Arizona-based ISM. Manufacturers projected employment will rise 1.5 percent, while service companies predicted a 0.6 percent drop.

“Services employment has been declining steadily and will continue to decline,” Anthony Nieves, chairman of the group’s services survey said in an interview. “There is going to be slow growth not substantial spikes.”

Labor Department figures last week showed payrolls dropped by 11,000 in November, the smallest decline since the recession began in December 2007. The unemployment rate fell to 10 percent from a 26-year high of 10.2 percent.

Fewer Openings

A report from the Labor Department today showed job openings declined in October, a sign employers are reluctant to expand staff even as firings subside. Openings, or the number of jobs available as a percent of total employment, fell by 80,000 to 2.51 million. The number of unfilled positions was down by 2.3 million, or 48 percent, since peaking in June 2007.

Confidence among small businesses declined in November to the lowest level in four months, the Washington-based National Federation of Independent Business reported today.

Those expecting to take on more staff fell to a net minus 3 percent from minus 1 percent a month earlier, the figures showed. Negative readings signal more owners plan to cut staff than hire more workers. The group’s sales index improved to minus 2 from minus 4, showing pessimism over revenue was starting to abate.

Obama called for “mobilizing” money from the financial- system bailout fund to open up more credit to small businesses, which accounted for six out of every 10 jobs created over the past 15 years.

Obama Initiatives

“Given the challenge of accelerating the pace of hiring in the private sector, these targeted initiatives are right and they are needed,” Obama said in a speech at the Brookings Institution, a research organization in Washington. “But with a fiscal crisis to match our economic crisis, we also must be prudent about how we fund it.”

Growing sales were making company chiefs at the larger firms more optimistic. The Business Roundtable’s economic outlook index increased this quarter to 71.5, the highest since July-September 2008, from 44.9 in the previous three months. Readings higher than 50 are consistent with economic expansion.

FedEx Corp. said yesterday its fiscal second-quarter profit will exceed its forecast as international and ground shipments increased, signaling a strengthening in the global economic recovery. The world’s largest cargo airline flies goods ranging from industrial parts to electronic equipment to financial documents, making its business a proxy for overseas commerce.

Demand Overseas

Overseas demand has “improved significantly,” Alan Graf, chief financial officer of FedEx, said in a statement. The company is No. 2 in the world in package deliveries behind United Parcel Service Inc.

The Business Roundtable’s employment results were more pessimistic than those reported by Manpower Inc. today. The world’s second-largest provider of temporary workers said 12 percent of the more than 28,000 companies it polled planned to hire additional staff in the first quarter, matching the share that anticipated more cutbacks. A record 73 percent projected payrolls will be unchanged.

After adjusting for seasonal differences, the Manpower index turned positive for the first time in a year.