Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 24, 1995 TAG: 9502240061
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
The Commerce Department reported Thursday that about 21,000 businesses surveyed said they would spend about $592.9 billion this year, up from an estimated $556.3 billion in 1994.
It would be the fourth consecutive increase in capital spending after a rare decline in 1991, when the last recession was ending. Capital spending totaled $489.1 billion in 1993.
Spending on business investments has been a major source of economic growth recently as companies modernize their plants and update their equipment in an attempt to become more competitive.
As a result, analysts say, workplace productivity has been unusually strong.
The increase in capital spending in 1995 would come despite seven Federal Reserve interest-rate increases in a year. The boosts were designed to slow economic growth and head off any spurt in inflation.
Many businesses have reported strong corporate profits recently, which could help offset the higher costs of borrowing.
Planned increases include the transportation industry's 5.9 percent, to $34.2 billion; communications, 20.2 percent to $53.6 billion; wholesale and retail trade, 6.8 percent to $72.8 billion; and finance, insurance and real estate companies, 9.3 percent to $40.3 billion.
Spending by service industries, on the other hand, are expected to decline 2.6 percent to $115.4 billion.
Other declines were expected by mining and construction companies, 1.9 percent to $41.3 billion, and utilities, 0.6 percent to $37.7 billion.
The surveys were mailed to about 30,000 businesses in November. The results from the 21,000 companies that responded were collected through early February.
by CNB