Capital Spending on the Rise
With growth in the economy, many manufacturers are having to invest in capital equipment. The bank found that 43% of respondents were planning to increase capital spending in the next six to 12 months. Only 16% reported they would be reducing spending.
Of those who reported they would be spending more, 44% said it was due to high capacity utilization, compared to 27% in August 2010 who said they would be increasing investment. The bank said other common reasons cited were expected sales growth and a need to replace equipment other than information technology. Also, nearly 32% said they needed to replace IT equipment and 29% said they had an improved cash flow/balance sheet position.
Six-Month Outlook Weakens
Looking ahead six months, manufacturers were becoming less optimistic about business conditions. The index for future general business conditions fell to 23.1, the fifth month of decline in a row.
The future new orders index fell 15 points to 15.5 and the future shipments index fell 13 points to 12.4.
