Plus: Durable Goods Rebound, Jobless Claims Fall and Mobile Device Security Lags.
America’s CEOs More Optimistic
American business leaders see more momentum in the economic recovery, and a rising number plan to hire, according to a group of chief executives of large companies. Released last week, Business Roundtable’s first-quarter CEO Economic Outlook Survey shows an upturn in expectations for sales, business investment and hiring for the next six months.
The association’s quarterly index, which measures large companies’ CEOs’ outlooks on the economy, leaped between January and March, reaching 96.9 points compared with 77.9 points in Q4 2011.
The following were Business Roundtable’s key survey findings from Q1 2012 over Q4 2011, based on responses from 128 member CEOs in March:
- An expected 12 percent increase in company sales;
- An expected 16 percent increase in company capital spending; and
- An expected 7 percent increase in company employment.
In terms of the overall U.S. economy, the group’s members estimate real gross domestic product (GDP) will grow by 2.3 percent in 2012, up from last quarter’s estimate of 2 percent.
Based on a separate report last week, from the U.S. Department of Commerce, the economy grew at a 3 percent annual rate in the last three months of 2011. The increase in GDP was the biggest since the second quarter of 2010 and followed a 1.8 percent gain in the prior period.
Durable Goods Rebound in February
Boosted by a surge in aircraft orders, new orders for U.S. manufactured durable goods rebounded in February from a steep decline in January, according to the U.S. Department of Commerce last week. Manufacturers’ bookings for long-lasting goods rose 2.2 percent to a seasonally adjusted $211.77 billion in February.
Durable goods orders have now risen in four of the past five months.
Excluding transportation, which is often volatile month to month, new orders increased 1.6 percent in February, in line with the median forecast in a Bloomberg News survey of economists.
At 3.9 percent, orders for transportation equipment posted the largest jump, with non-defense aircraft and parts orders rising $1 billion and making up nearly half the total gain. Orders for non-defense capital goods, excluding aircraft – a closely watched proxy for future business investment – edged 1.2 percent higher.
“The prolonged recession caused firms to postpone investment and reduce capacity. Now that the economic growth has continued for more than two-and-a-half years, the need for machinery and equipment replacement need has built up to the point where the pent up demand is being released,” Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), wrote in an analysis of the government data. “The same pent-up demand story is occurring in consumer durables, particularly motor vehicles. Although exports are growing at a slower rate because of the recession in Europe, emerging market demand remains robust for U.S. machinery and equipment that can support developing countries’ investments in infrastructure.”
Meanwhile, shipments of manufactured durable goods dipped 0.4 percent to $206.6 billion in February, following a 0.1 percent increase the prior month. Transportation equipment, down after two consecutive monthly increases, had the largest drop, 2.5 percent.
Jobless Claims at Four-Year Low Again
New initial jobless claims fell in the latest week reported, continuing the downward trend in job losses. According to the U.S. Department of Labor, seasonally adjusted unemployment claims for the week ending March 24 decreased by 5,000 to total 359,000, the lowest level since April 2008. The four-week moving average, which provides a more long-term view, dropped by 3,500 to 368,500, also a four-year low.
“When unemployment benefit applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate. The decline has coincided with the best three months of hiring in two years,” the Associated Press explains. “The department made annual revisions to the past five years of data, which increased the number of applications in recent months and showed a slower decline. Still, even after the revisions, applications have fallen roughly 12 percent over the past six months.”
The recent drop in unemployment claims fell slightly short of expectations, as economists polled by Reuters had forecast a reading of 350,000 for the week. With the nation’s unemployment rate at 8.3 percent and with 5 million fewer jobs in the labor market than before the economic downturn began in 2007, it is likely to take several years before employment conditions return to pre-recessionary levels. However, monthly job creation performance is expected to remain strong in the short-term future.
“An improved labor market is reflected by the monthly employment figures. The U.S. has generated an average of 245,000 jobs in each of the past three months, the fastest increase in hiring since the recession ended in 2009,” MarketWatch reports. “[This] week, the government is expected to report that an additional 235,000 jobs were created in March.”
Companies Lagging in Mobile Device Security
While mobile devices are surging in use, with more businesses adopting mobile technology and growing numbers of employees working remotely, new research indicates that the majority of companies have inadequate or non-existent measures for protecting their mobile technology systems from security risks.
According to a study from information technology (IT) trade association group CompTIA, 84 percent of smartphone owners use their device for work-related functions, such as e-mail or web browsing. Tablet owners have access to an even wider range of business applications, including note-taking and presentations. However, only 22 percent of companies surveyed had a formal mobile device policy in place, while just 20 percent are working to establish one.
“Support for mobile employees is another area that IT departments and solution providers will need to consider. With less ability to meet in person, help desk options such as telephone support and e-mail may be limiting,” CompTIA explained in an announcement of the findings. “Those options were the most ubiquitous among survey respondents, but the most effective options were actually choices that were in place at the fewest companies: remote log-in and instant messaging.”
Lack of support for mobile technology is particularly worrisome when it comes to security issues. Seventy percent of IT staff in the survey reported that security is the greatest risk in supporting mobile devices, with common security incidents – such as lost devices (56 percent), violations of corporate policies for data (25 percent) and mobile phishing attacks (21 percent) – prompting companies to re-examine their mobile security strategies.
Standard protection measures, such as using passcodes and tracking software, may be insufficient, as 33 percent of IT staff cited a need for improved security technologies. Moreover, 40 percent of end users said they would be “somewhat open or very open” to having additional security software installed on their mobile devices.