NAM Survey: Expect Moderate Capital Spending Rebound

By John S. McClenahen Following four consecutive calendar quarters of decline, capital spending by U.S. manufacturers will be increasing by midyear and gain momentum during 2002's second six months, suggests a new survey from the National Association of Manufacturers (NAM), Washington, D.C. Some 45% of the 665 companies responding to the NAM member survey say their capital spending will rise at an annual rate of up to 5% during the first six months of this year. Another 15% of the firms expect to increase their capital spending 5% or more, compared with 2001. For the second half of 2002, 54% of the companies anticipate capital spending growth up to 5% and 25% say spending will increase more than 5%. "This survey is the first concrete evidence we have seen that our members are actually planning to increase capital spending," relates Jerry J. Jasinowski, NAM's president. However, even with higher levels of capital spending expected during the second half of the year, the overall increase probably will average only about 5% for the year, Jasinowski figures. That's about half the 10% average annual increase in capital spending by manufacturers between 1992 and 2000, following the 1990-1991 U.S. recession. Significantly, 38% of the survey respondents say that compared with 2001, their capital outlays will continue to fall during the first half of 2002. And 20% anticipate a continuing decline in the second half. Industrial equipment apparently will be the major beneficiary of the increased capital outlays. More than half of the companies in the NAM survey say they'll be spending up to 5% more on industrial equipment by the last half of 2002 -- and another 18% say they'll be spending 5% to 10% more. In contrast almost 40% say they'll continue to spend less on telecommunications equipment. The NAM survey was conducted during the week of Feb. 11. About two-thirds of the firms responding are small companies.

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