Merrill Remains Bullish On Capital Spending

Machine tools are not the U.S. economic bellwether they once were, but, says Merrill Lynch & Co., metalworking machine tools are among the American-made capital goods most in demand by foreign buyers. Other high-demand goods are generators, specialized mining machinery, industrial machines, office business machines, aircraft, marine engines and railway transportation equipment, says the New York-based financial firm.

It's bullish on capital spending, forecasting a 10% increase in outlays this year and 8% next year. Last year capital spending rose 11%. This year's and next year's forecasts show "slowing," acknowledges Merrill, but are "hardly slow," it insists. Indeed, capital expenditures will account for 3.5% of GDP this year, just about what they did in 2005, believes Merrill.

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