Companies gear up for expected economic recovery

By Carlos Torres
Bloomberg News Service

WASHINGTON — Small and mid-sized U.S. companies are looking to increase spending on equipment and software and add more employees this year to take advantage of an expected economic recovery, a survey of chief executive officers showed.

The world's largest economy is likely to rebound from recession by the end of 2002, said 86 percent of the executives surveyed by TEC International, an association of more than 6,000 CEOs at U.S. companies with annual revenues between $1 million and $1 billion. A third said the recovery is already under way.

Of the 1,196 executives who responded to the survey, 57 percent expected to increase staff during the next 12 months and 43 percent forecast an increase in expenditures on equipment and software intended to boost productivity.

"It's pretty clear they are beginning to gear up for what they see as a rebound in the economy later this year," said Dan Barnett, executive vice president at TEC International. "They are making investments because they believe there is opportunity if they respond now."

The survey, taken quarterly, showed 5 percent of chief executives planned to reduce payrolls, down from 15 percent in the last poll taken in October, a month after the terrorist attacks.

Eight of 10 company leaders expect sales to improve this year from last and a fifth forecast an increase greater than 20 percent. Three-quarters of the respondents said the military campaign against terrorism has had no effect on business.

The industries likely to rebound fastest from recession are manufacturing, information technology and biotechnology, the respondents said.

The TEC survey has a margin of error of plus or minus 3.7 percentage points, the organization said.