U.S. Corporations’ CapEx Expected To Grow 1.2 Percent

U.S. Corporations’ CapEx Expected To Grow 1.2 Percent

Analysts at Citi Research projected that the capital expenditure (CapEx) of corporations in the United States is expected to grow by 1.2%.


Citi Research analysts Tobias Levkovich, Lorraine Schmitt, and Christina Wood estimated that the 700 non-financial publicly traded companies in the country they covered are prepared to spend approximately $662 billion this year.

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CapEx Estimate

Decline in CapEx

The analysts noted that the 1.2% CapEx gain slightly declined compared with their previous forecast at 1.6%. According to them, the slight decline is primarily attributed to energy companies as well as the slowdown of the materials sector.

Levkovich and his fellow analysts noted that capital expenditures data from GDP figures showed robustness in the United States, but countered by weaknesses overseas. According to them, the analysts of the research firm in the mining industry projected that a sharp decline is likely to happen in new mine development, which would cause negative impact in overseas spending over the next few years.

The analysts expected to perceive significant differences in geographic spending patterns because of the slowdown of in some of the emerging economies. They also observed that the spending in Europe remain tight.

Technology sector’s capital expenditure to increase

Based on initial data, Levkovich and his colleagues believe that the technology sector’s capital expenditure will increase by double-digit next year in order to meet demands for products and services. According to them, the sector’s largest customers are the companies within it.

The analysts added that the lending standards in the United States indicate better capital expenditure plans over the next several months. According to them, the Federal Reserve’ senior loan officers maintained their statement that the economy is improving and spending activity is better since 2009 to 2010.

Lending Standards

Reductions in credit conditions

However, the analysts opined that recent increase in bond yields caused some reductions in credit conditions, and they expected to see its impact in the middle of 2014. According to them, the software & services as well as the telecommunications industry are spending aggressively this year while the utilities industry is cutting back. Levkovich and his fellow analysts also observed that the food products and consumer services company showed impressive capital plans this year. Companies within the auto & components and biotech sectors are reducing spending activities.

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