Exclusive: CEOs signal hiring pullback
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Backward-looking economic data shows America's job market is slowing. Future plans at some of the nation's biggest corporations show the slowdown might continue, according to survey results shared first with Axios.
Why it matters: Once the labor market starts cooling, it typically continues. The central question for the economy is whether this time will be different.
The latest hint comes from a new Business Roundtable survey of 145 top business leaders that points to muted economic confidence.
- The lobbying group's index that tracks CEO confidence fell 5 points in the third quarter to 79, dipping below the historical average for the first time this year.
- Among the factors that pulled the index down: A smaller share of executives are planning to increase headcount.
What they're saying: "This is the second consecutive quarter in which CEOs have reported they are moderating their hiring plans," Joshua Bolten, the CEO of the Business Roundtable, said in a statement.
- Still, fewer than 30% of executives plan to decrease hiring — not too much lower than the historical average.
- The survey's results "seem to be consistent with the Fed's perspective on a softening economy," Bolten said.
The survey also shows that 37% of CEOs anticipate no change to employment in the next six months. Meanwhile, 34% say headcount will increase in that time period.
The intrigue: The sentiments reflected in the survey match developments in the labor market.
- Demand for staff has slowed. Workers entering the labor market find it harder to get a job — a factor pushing up the unemployment rate.
- Layoffs, however, remain low. That's a sign that most companies aren't necessarily shedding workers, though they are slowing the hiring of new employees.
More CEOs anticipate sales will slow in the months ahead — a factor that might be influencing their receding hiring plans.
- The sales sub-index dropped 13 points to 110, indicating that executives expect moderating demand for their goods or services as the economy cools.
What to watch: The index tracking plans for capital investment — spending on new equipment, factories and more — edged up slightly by 3 points.
- "A majority of CEOs indicated they plan to maintain or increase capex in the near term — investing in equipment, technology and other tools that drive productivity and growth," Cisco CEO Chuck Robbins, who chairs the Business Roundtable, said in a statement.
The bottom line: CEO expectations don't point to a recession. But they confirm the concerns about the labor market that are pushing the Fed to cut interest rates on Wednesday afternoon.
