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Manufacturers to cut capital spending for the first time since 2009

December 19th, 2019 / By: / Industry News

U.S. manufacturers plan to pull back on investing in 2020, a move that could rein in a rebound even as companies increase profits. In a Bloomberg report, citing a semiannual survey from the Institute for Supply Management Factory, executives forecast capital expenditures will decrease 2.1 percent in 2020. It would be the first annual decline in 11 years. That compares to a reported increase of 6.4 percent in 2019. Managers at non-manufacturing firms expect a 1.3 percent rise next year, lower than 2019’s increase of 2 percent.

Thirty-eight percent of companies cited domestic economic conditions as the main reason for adjusting their spending plans; just 3 percent of those cited tariffs, while 44 percent cited other factors. Data from the Institute for Supply Management show that manufacturing is contracting, but the report indicates a turnaround may begin in the first half of 2020 and gain momentum through the year. Still, companies have held off on long-term investments due to uncertain trade policies, escalating tariffs and a moderating growth outlook—something that weighed on economic growth in the second and third quarters, according to the publication.