World business confidence cools, US a bright spot

Global business confidence cooled in June as the euro zone debt crisis took its toll, though corporate sentiment in the United States held up better, a survey from financial information firm Markit showed on Sunday.

The percentage of companies around the world that expected business activity to rise over the next 12 months outnumbered those anticipating a decline by a margin of 37%, according to Markit's global business outlook survey.

That was down from a difference of 44% in February, when Markit last did the survey of 11,000 manufacturing and services companies.

Even with the decline, the survey pointed to economic expansion, Markit said, and sentiment was still better than October's post-crisis low, when optimists exceeded pessimists by 32%.

Hiring intentions for the next year also waned, with 17% more companies planning to expand over those that did not, down from a gap of 19% in February.

"Businesses globally have scaled back their expectations for business activity, revenues and profits growth compared to earlier in the year, which has in turn led to a deterioration in the employment outlook," Chris Williamson, chief economist at Markit, said in a statement.

Expectations for business activity in the euro zone dropped off, to a margin of 16% from 26%. The United States fared much better, with those that expected activity to pick up outpacing those that did not by 57%, though that was down from 69% earlier in the year.

Global capital spending plans were unchanged, with a net difference of 14%. US companies that intended to increase investment outstripped firms that planned to pull back by 21%, a new high for the survey. In the euro zone, spending was seen falling.

"Increased capital investment suggests that companies have by no means withdrawn into purely cost-cutting mode, especially in the US, which looks set to remain a bright spot in the global economic picture in the coming year," said Williamson.

Price pressures were seen easing, providing some relief for companies after a ramp up in costs earlier in the year. The difference between those that expected input costs to rise this year and those that did not fell to the lowest since October 2009, at 20% from 27%.