US firms see more hiring, capex in 1st half

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US businesses plan to increase hiring and capital spending in the first half of this year, a survey showed on Monday, steps that could give the economic recovery further impetus.

The National Association for Business Economics said its fourth quarter industry survey found a moderation in the pace of lay-offs and just under a third of the 73 members who participated expected to add payrolls.

This is up from 24 percent in the third quarter.

The survey, conducted between Dec. 18 and Jan. 7., "provides new evidence that the US recovery from the Great Recession continues, albeit at a slow pace," said William Strauss, a senior economist at the Federal Reserve Bank of Chicago and economic advisor for the NABE.

The US economy resumed growth in the third quarter of 2009, largely driven by government stimulus.

While companies have eased up on lay-offs, they have been reluctant to hire, stoking worries that the recovery could falter without the crutch of government money.

Analysts argue that job growth, even on a small scale, will be a confidence booster for households who have drastically cut back on spending. Consumer spending normally accounts for more than two-thirds of US economic activity.

According to the NABE survey, respondents in finance, insurance and real estate planned to increase hiring in the first half of this year, while those in the goods producing and utility sectors expected net job losses.

The US unemployment rate is 10 percent, the highest in 26 years.

About 44 percent of respondents expected to increase capital spending over the next 12 months, while only 15 percent planned to scale back. Much of the investment will be in computers and communications equipment.

Fewer businesses planned to spend on structures, the survey found.

It also found that a small number of businesses were building inventories in anticipation of stronger sales, but a large number were still cutting back accumulated stocks of unsold goods to manage costs and conserve cash.

The rebuilding of inventories is one of the key factors expected to contribute to strong growth in the fourth quarter.

Analysts believe gross domestic product growth accelerated to an annual pace of between 3.5 and 5.6 percent in the October-December period after expanding at a 2.2 percent rate in the third quarter.

The government will release its initial estimates for fourth quarter GDP on Friday.