The chief executives of the nation's fastest growing private companies have raised their sights for both revenue growth and new hiring over the next 12 months, but fewer are planning major new investments of capital, according to a survey by PricewaterhouseCoopers.

Leaders of the country's fast-growth companies are upbeat on the economy. Eighty percent of 341 CEOs surveyed count themselves optimistic about the domestic economy's prospects over the next 12 months, while 78 percent are optimistic about the world economy, a five-year high.

The CEOs polled expect the U.S. economy to grow 3.3 percent in calendar 2005, in line with a final estimate of 3.2 percent for the year 2004, PwC said.

Overall, surveyed companies are projecting 12-month revenue gains averaging 22.3 percent - up from their year-ago pace of 20.2 percent. Service businesses expect faster growth than product companies: 25.3 percent versus 18.6 percent, respectively. Technology companies are projecting a 22.9 percent increase, versus 21.7 percent for their non-tech counterparts.

PwC global technology industry leader Paul Weaver said that some of the positive outlook may be attributed to marketplace receptivity for products and services, while some may be traced to the three-year decline of the dollar, which Weaver said is helping to fuel growth of export revenues.

Despite their optimism about revenue growth, a majority of the CEOs polled (51 percent) are still concerned about a possible weakening of market demand over the next 12 months, off from 54 percent in the prior quarter.

Other concerns include the scarcity of qualified workers, cited by 38 percent, decreasing profitability (31 percent), legislative and regulatory pressures (31 percent), and pressure for increased wages, 25 percent.

New hiring plans remain robust, with 79 percent of surveyed companies expecting net job gains over the next year, in line with the prior quarter's reading. Eighteen percent anticipate no change in their number of employees, while 3 percent foresee cutbacks. Overall, average workforce growth of 9.9 percent is seen, compared to 8.1 percent a year ago.

But, in contrast to the expected increases in jobs, PwC said that plans for new investments of capital are down. Over the next 12 months, 41 percent of the surveyed CEOs plan major new investments, a sharp drop from 48 percent in the preceding quarter - and a return to the same level as a year ago.

Information technology and new product development are the two leading categories where increased investments are anticipated, planned by 45 percent and 42 percent, respectively, followed by sales promotion (38 percent), advertising (32 percent) and facilities expansion (32 percent).

Weaver cited several sources for the decline in expected investments. "The Accelerated Depreciation Allowance, an attractive tax incentive for new investments, expired in December," he noted. "Also, some of the funding originally earmarked for investments may have been appropriated to cover increased energy costs. And, although a provision of the American Jobs Creation Act, signed into law last fall, creates new incentives for domestic investment of repatriated foreign earnings, it could be causing some CEOs to pause, re-think and fine-tune their deployment of investments before proceeding."

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