Exclusive: CEOs plan more investment, soft hiring
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Economic sentiment among America's most prominent CEOs edged up this quarter amid a surge in capital spending plans — but simultaneously, more top executives expect to shelve hiring plans.
Why it matters: The mix of more investment but soft hiring, in a Business Roundtable survey first seen by Axios, points to higher productivity over time but is a warning sign for workers in the near term.
The big picture: The BRT's economic outlook index rose 7 points last quarter, an increase that still leaves the index below its historical average.
- The rebound reflects more CEOs planning to increase capital expenditures — that is, spending on equipment, buildings and technology — after the passage of President Trump's tax-and-spending bill.
- The survey, fielded earlier this month, shows that 38% plan to increase spending in the next six months, up a whopping 10 points from the previous quarter.
What they're saying: "Though we are pleased to see some recovery in CEO plans for capex, there's fragmentation among the various sectors, with trade-exposed industries like manufacturing facing headwinds," Business Roundtable CEO Joshua Bolten said in a statement.
- "The increase in capex plans signals CEOs are optimistic about the pro-growth tax policies in the recently enacted reconciliation legislation," said Cisco CEO Chuck Robbins, who chairs the Business Roundtable.
Yes, but: For the second consecutive quarter, the survey's employment sub-index held below the level that has historically signaled an economic contraction. Tariffs and economic uncertainty have crimped the hiring outlook.
- After the sub-index plummeted 13 points in the previous three-month period, it edged up just 2 points last quarter, "consistent with a softening labor market," BRT says in a release.
- But that uptick reflects a slightly larger share of CEOs who say their firm's employment won't budge in the next six months — and fewer signaling it would decrease.
The intrigue: The survey might reflect economic trends already underway, as employers lean into technology investment that might ultimately mean fewer workers.
- "We're getting unusually large amounts of economic activity through the AI build-out and corporate investment," Federal Reserve chair Jerome Powell told reporters Wednesday. "No one knows how long that will go on."
- Data center-related investment contributed more to GDP between the final three months of 2024 and the second quarter than consumer spending, according to calculations by the Council on Foreign Relations this month.
What to watch: The BRT survey showed a larger share of CEOs — 71%, up 4 percentage points from the previous quarter — anticipate stronger sales revenue in the next six months.
- But it is difficult to tell whether that's a result of stronger economic demand or nominal sales rising as tariffs-related costs are passed along to consumers.
- "The President has secured some significant concessions in trade negotiations, and we urge our trading partners and the Administration to continue working together to remove harmful tariffs and non-tariff barriers," Bolten said.
