Posted on 04/05/2004 5:53:16 PM PDT by RWR8189
Confidence among US business leaders is stronger than it has been for 20 years, according to a long-running measure of boardroom attitudes, as rising profits finally encourage companies to start hiring.
The quarterly survey by the Conference Board confirms last week's official employment data suggesting concerns about a jobless recovery may be waning.
In recent quarters, companies have been wary of hiring staff, preferring to make greater use of existing capacity, but continued growth and record profitability appears to be convincing managers that productivity improvements alone may not be enough to meet rising demand.
Half the chief executives who responded to the Conference Board's lastest poll said they expected employment in their industry to rise, compared with just 12 per cent who predicted a fall - the most optimistic response on jobs since the research group began its analysis in 1976.
Overall confidence levels about the economy are the highest since 1983, with more than three quarters of CEOs expecting continued growth over the next six months.
Lynn Franco, director of the conference board's consumer research centre, said: "We were expecting a strong confidence reading given the last two quarters of back-to-back growth but the optimism about hiring is particularly interesting and suggests we may have turned the corner.
"They now forsee enough growth that despite productivity gains they will need to hire more bodies."
The bullish results, based on responses from more than 100 members of Conference Board, follow signs of a turnaround in official US employment data, which last week showed the biggest monthly increase for four years.
Expectations that a healthier job market will allow a rise in US interest rates also helped push the dollar to a four-month high against the euro yesterday
In contrast, confidence polls reflect only a partial snapshot of the mood among some business leaders, but the Conference Board's results are neverthless in line with other recent surveys showing a rising trend.
Last month, an employment outlook survey by Manpower found US employers expect the seasonally adjusted hiring pace from April to June to be stronger than it has been since the first quarter of 2001.
Based on a survey of 16,000 U.S. employers, 28 per cent said they plan to increase hiring activity for the April - June period, while 6 per cent expect a decrease in employment opportunities.
When the seasonal variations are removed from the data, the outlook for the second quarter is more positive than it was last quarter and is nearly twice as strong as it was last year at this time.
Earlier in the year, The Business Council, which reflects the mood among large companies, also reported the first signs of a similar pick-up in confidence.
Nevertheless, companies continue to report a number of negative factors which may slow the pace of hiring.
The latest Conference Board survey singled out rising healthcare costs as by far the biggest factor, with 44 per cent saying it was a "major obstacle" to hiring.
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