Flush with cash, U.S. companies poised for capital spending next year
Wednesday, December 12, 2012 11:52 AM
American companies are poised to put idle cash to work as demand rebounds in 2013 after spending slumped amid the slowdown in China and Europe's recession, Bloomberg reported.
Manufacturers project they will invest more next year than this year, according to the Institute for Supply Management's (ISM) semiannual survey. Orders for capital equipment, excluding defense and aircraft, rose 2.9 percent in October, the biggest increase since February.
Apple Inc., Starbucks Corp. and Chevron Corp. are among those announcing additional expenditure plans as economies stabilize, banks ease lending rules and some industries approach full capacity.
Companies, excluding financial institutions, are sitting on a record $1.74 trillion in liquid assets that could be put to use, especially if lawmakers agree to avert budget cuts and tax increases scheduled to take effect in January.
"Businesses are flush and highly competitive, and this will shine through in a revival of investment spending by this time next year if Washington can get it roughly together," said Mark Zandi, chief economist at Moody's Analytics Inc.
Spending on capital projects, those meant to increase productivity and capacity, will increase 7.6 percent next year, the biggest gain for any December survey going back at least seven years, according to ISM's poll of purchasing managers. Last December, respondents forecast a 1.9 percent advance for 2012. Read more.