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Private companies optimistic about hiring and sustained overseas investment

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Private companies optimistic about hiring and sustained overseas investment

Highest number of private companies planning to increase headcount since 2007 - but concerns over skills remain.

According to a newly-released survey by professional services giant PwC, a majority of private companies have voiced optimism about the U.S. economy for nine consecutive quarters, with 70% currently expressing a positive outlook – up from 59% in 2Q 2014. This sustained level of confidence is resulting in more companies planning major investments, including new capital projects and hiring.

The quarterly report, which tracks the economic sentiments and business outlook of America's leading privately held companies, shows this optimism being mirrored by private-company performance, with 34% reporting improved gross margins, the highest number in more than a decade. Roughly five out of six private companies expect their revenue to grow in the next 12 months, nosing back toward pre-recession levels.

"While we've seen high post-recession optimism levels among private companies before, only in the past couple of years have those levels been sustainable."

Increased spending and cautious expansion into new markets prevails

In the second quarter of this year, 36% of companies said they planned to spend on new capital projects in the next 12 months (up from 29% the prior quarter). Information technology is the top area where private companies plan to increase investment (31%), followed by marketing and sales promotion (22%). However, there is some growing concern among private-company leaders about higher interest rates (18%, up from 8% a year ago) and about a stronger dollar (19%, up from 8% a year ago). And with their current operating capacity at the highest level since 2007 (92% say they have reached at least three-quarters operating capacity), private companies' appetite to spend may be curbed somewhat until greater capacity opens up.

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