
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, April 11, 1991                   TAG: 9104110101
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short

BUSINESSES PLAN SMALL SPENDING RISE

The nation's recession-buffeted businesses plan to boost their investments in new plants and equipment investments by just 3.2 percent this year, the government said Wednesday. That would be the skimpiest increase in capital spending in five years.

The Commerce Department said a survey conducted during the first three months of 1991 found businesses planning to spend $540.9 billion for expansion and modernization.

While that would be up from the record $524.2 billion in capital spending set in 1990, it would be the smallest increase since investments actually fell 3.1 percent in 1986.

Samuel D. Kahan, chief financial economist for Fuji Securities in Chicago, attributed the meager investment plans to "lower profits, greater uncertainty over prospects for economic growth and a general conservative attitude."

Many economists had expected capital-spending plans to decline in the midst of the recession, weak corporate profits and concerns over the Persian Gulf War. The boost in spending, however small, was welcome news since any increase would be a stimulant to the economy.

In addition, spending for business investment to replace aging plants and equipment and expand facilities helps to boost U.S. productivity, an increasingly important factor in view of the stiff competition the nation faces from overseas.

Before adjusting for inflation, the survey found businesses planning to increase their plant and equipment spending by 2.5 percent, for a total of $546.4 billion, following gains of 5.0 percent in 1990 and 11.4 percent in 1989.

by CNB