Most chief executive officers of large U.S. companies expect higher sales and higher capital spending in the next six months, but their optimism about economic conditions and expectations for growth are more muted than three months ago, according to a quarterly survey.

The survey by Business Roundtable, an association of U.S. CEOs, found 51 percent expected to add U.S. jobs in the second half of the year, while 61 percent would boost capital spending. Both measures are down slightly from the previous quarter.

Overall, the Roundtable's index of executives' economic outlook dipped to 109.9 from a record high of 113 in the first quarter. The index turned negative in the first quarter of 2009 but then rebounded in subsequent quarters, eventually passing its 2005 peak earlier this year.

Expectations for economic growth also dipped in the latest survey. CEOs now predict the U.S. economy will grow by 2.8 percent this year, down from a forecast of 2.9 percent growth three months ago.

Confidence about capital spending could be a sign of more robust future hiring, said Verizon Communications Inc CEO Ivan Seidenberg, the Roundtable's chairman.

(Large companies) have had a pretty steady perspective on hiring the last six or seven months. In the broader economy, when you look at small or medium business, that's where we haven't seen much job formation, Seidenberg said.

President Barack Obama on Monday pledged to act on suggestions from a panel of corporate executives led by General Electric Co CEO Jeffrey Immelt. The jobs council's proposed measures include cutting red tape and investing in energy efficiency.

WORRIED ABOUT $4 GAS

Gas prices, although they have retreated from recent highs, remain a concern for companies that sell consumer goods. The proportion of U.S. CEOs expecting higher sales -- 87 percent -- fell 5 percentage points from the first quarter, the survey found.

May retail sales fell last month for the first time in 11 months, the Commerce Department said Tuesday.

CEOs are optimistic debt talks in Washington will progress toward a resolution, Seidenberg added, but confidence could erode if the negotiations fail or if the Obama administration does not advance issues like trade liberalization or bringing corporate tax rates more in line with other countries.

There's been enough movement on these issues that would suggest the structural issues dogging the economy will begin to clear up, Seidenberg said.

Negotiations to raise the U.S. debt limit are complicated by the need for more stimulus measures amid 9.1 percent unemployment.

Business Roundtable's CEO Economic Outlook Survey, conducted quarterly since 2002, was completed between May 16 and June 3 and includes responses from 135 member CEOs.

Member companies represent about a third of U.S. stock market valuation and almost $3 trillion in annual revenues.

(Reporting by Nick Zieminski; Editing by Lisa Von Ahn and Matthew Lewis)

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