New York, NY, Feb. 19--Corporate profits, stock prices and the U.S. economy are all expected to steadily improve in 2004, but corporate leaders remain cautious about hiring, according to a survey of national business leaders released Wednesday in Boca Raton.
Business leaders "are being very cautious about hiring," said Franklin D. Raines, an executive of The Business Council and CEO of Fannie Mae. "Clearly, they're not saying, 'I'm so confident, I'm going to get out in front of [the economy] and start hiring.'"
Of the 70 chief executives who responded to the survey, which was published by The Business Council, about 40 percent said they are expecting to increase U.S. employment this year, a somewhat reserved response given that the majority expect the economy to expand as much as 4.5 percent this year.
The results of the business council's survey--which was conducted earlier this month--are closely watched because they gauge the sentiments of some of the nation's top business leaders. The council's 120 members include CEOs at companies such as Procter & Gamble Co., General Motors Corp., and Dell Inc.
Raines said productivity gains are allowing companies to produce more with the same amount of workers, which has slowed job creation.
The survey's summary, which was released on the first day of the council's three-day meeting, was blunt in assessing the nation's hiring prospects in 2004 and other aspects of the economy: The "data on jobs, capital spending, and inventories is not as positive as expected, given the CEOs' expectations of a pickup in the overall economy."
About 85 business leaders are expected to attend the council's meeting that runs through Friday. A spokesman said it is the group's policy not to name attendees.
Despite forecasting sluggish hiring this year, the survey offered upbeat views in other economic areas.
Raines, of Fannie Mae, predicted that housing sales in 2004 would hit a record, or stay at near-record highs, which would further bolster the economy.
In 2004, three-quarters of survey respondents said a rise in spending for business equipment, consumer goods and government spending would help the economy expand from 3.6 percent to 4.5 percent. A weak U.S. dollar, which stimulates export sales, would also play an important role in economic growth this year.
More than eight out of ten survey respondents said they expect the national unemployment rate to "fall modestly" to between five percent to 5.5 percent by year's end.
The risks ahead? High-energy prices and rising long-term interest rates could dampen economic growth, the survey said.
And business leaders will remain wary about expanding their facilities too fast in 2004, said Charles O. Holliday Jr., a council executive and CEO of E.I. duPont de Nemours & Co. "You're going to see incremental expansions" instead of new factory construction, he said.
