Pockets of the global economy are showing steady improvement, Honeywell CEO Dave Cote told CNBC on Monday, adding that the impact from a political fight over the U.S. federal budget sequester is likely to be muted.
The manufacturing giant, which reported slightly better than expected quarterly profits on Monday, cited economic improvement in Europe and the U.S. In an interview on CNBC's "Squawk on the Street", Cote voiced cautious optimism.
"While we're encouraged by what we're seeing, at the end of the day we're not ready to bet on it yet and say this is for sure," the CEO said. "So we're going to continue to be cautious and make sure this is real before we're kind of going all in."
Cote also said that a recovery in the U.S. home sector would continue "an inexorable rise to get up to 1- 1.2 million units a year again,where it probably sure to have been all along."
As Washington battles over the federal budget, Cote was less than sanguine that Congress and the White House would strike a grand bargain to avoid a mix of high taxes and spending cuts. In fact, "I'd say there's a good chance we could have the sequester occur."
Other companies have voiced concern over the size and scope of the proposed spending cuts. Cote called the potential reduction in outlays "a hatchet instead of a scalpel" but predicted it could force Washington to confront the U.S. debt troubles.
(Read more: US 'Needs to Get Going on Debt': Honeywell CEO.)
"I'm not one of those guys who becomes paralyzed by the idea the sequester will actually occur," he said. "I'm not that hung up on it, if it happens it happens."