Washington, June 11 (Bloomberg) -- Chief executive officers at small and mid-size U.S. companies are less optimistic about the economy's recovery from recession than they were three months ago, a survey showed. Almost two-thirds of the company leaders said the world's largest economy has yet to rebound, according to the survey by TEC International, an association of more than 6,000 CEOs at U.S. companies with annual revenues between $1 million and $1 billion. Of those surveyed, 1,450 replied. Fewer than eight in 10 of the chief executives said a recovery would happen by the end of the year, down from 86 percent who forecast a recovery in the previous survey in March. ``I think there was just a little too much optimism'' last quarter, said Nancy Rhodes, chief executive at Furniture Affairs Inc., a home furnishings discount retailer in Phoenix. ``People were looking for a quicker recovery and that wasn't likely to happen.'' Seven out of 10 executives expect the economy will expand by 1 percent to 2 percent for the year. The CEOs are less optimistic than economists who forecast the economy will expand at a 2.8 percent pace in 2002, according to this month's Blue Chip Economic Indicators consensus. The decline in sentiment has led CEOs to change their plans for hiring and firing, the quarterly survey showed. About 56 percent said they expect to increase staff during the next 12 months, down from 57 percent in the previous survey. Fourteen percent said they would cut payrolls, up from 5 percent in March. The latest government jobs figures show the economy added 41,000 jobs in May after a 6,000 April increase, marking the first back-to-back gains since the start of the recession in March 2001. Some larger companies such as Home Depot Inc. and Best Buy Co. have announced plans to hire. Since the first of the year, the economy has lost 142,000 jobs, the Labor Department said last week. Still, an increasing number of companies plan to boost investment in equipment and software, the CEO survey showed. Forty- nine percent said they would raise capital expenditures in the next year, up from 43 percent of those polled in the first quarter. Eight of 10 company leaders expect sales to improve over the next 12 months compared to the previous year. Three-fifths of the respondents said tensions in the Middle East had no effect on business. The industries likely to rebound fastest from the recession are retailing, manufacturing, and biotechnology, the respondents said. The TEC survey has a margin of error of plus or minus 3.4 percentage points, the organization said.