Plant and equipment expenditures Essay

BUSINESS plans to spend $333.4 billion for new plant and equipment in1985, 8.4 percent more than in 1984, according to the survey conductedin late October and November (tables 1 and 2, and chart 5). The latestestimate for 1984 spending is $307.

6 billion, 14.3 percent more than in1983, and is essentially unchanged from that reported in September forthe survey conducted in lae July and August. Real spending–capital spending adjusted to remove pricechanges–is estimated to increase 6.8 percent in 1985. The latestestimate of real spending for 1984 indicates an increase of 13.

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3 percentfrom 1983; real spending decline 3.6 percent in 1983 (tables 2 and 3).Estimates of real spending are computed from the survey data oncurrent-dollar spending plans and from estimated capital goods pricedeflators prepared by BEA. The laest deflators developed by BEAindicate that capital goods prices will increase 1.

5 percent in 1985,following a 0.8-percent increase in 1984; capital goods prices declined1.3 percent in 1983. Current-dollar spending in the third quarter of 1984 increased 3.

4percent, to an annual rate of $313.1 billion, following a 3.3-percentincrease in the second quarter; third-quarter spending was 1.0 percentlower than planned spending reported 3 months ago.

Plans reported in thelatest survey indicate a 2.6-percent increase in the fourth quarter, andincreases of 5.1 percent and 2.

1 percent in the first and secondquarters of 1985, respectively. Real spending increased 3.1 percent in the third quarter of 1984,following a 2.6-percent increase in the second quarter. Estimatesindicate a 2.

3-percent increase in the fourth quarter, a 4.9-percentincrease in the first quarter of 1985, and a 1.7-percent increase in thesecond. Manufacturing Programs Manufacturing industries plan an 11.6-percent increase incurrent-dollar spending in 1985, to an annual rate of $146.2 billion;the latest estimate of spending for 1984 indicates an increase of 17.5percent from 1983. Durable goods indusries plan a 13.

9-percent increasein 1985 and nondurables, a 9.5-percent increase. In durables, thelargest increases are planned in motor vehicles, 30.0 percent; iron andsteel, 19.6 percent; and electrical machinery, 15.5 percent.

Innondurables, the largest increases are planned in food-beverage, 17.6percent; rubber, 15.6 percent; and paper, 13.6 percent.

A decline of5.3 percent is planned in textiles. Current-dollar spending in manufacturing increased 5.

3 percent inthe third quarter of 1984, to an annual rate of $134.5 billion,following a 4.0-percent increase in the second quarter. Durable goodsindustries increased spending 8.7 percent in the third quarter andnondurables, 2.

4 percent. Manufacturers plan a 3.4-percent increase inthe fourth quarter, and increases of 5.0 percent and 3.6 percent in thefirst and second quarters of 1985, respectively.

Real spending by manufacturers is estimated to increase 9.0 percentin 1985–10.5 percent in durables and 7.4 percent in nondurables. Thelatest estimate of real spending in manufacturing for 1984 indicates anincrease of 15.6 percent from 1983. Nonmanufacturing Programs Nonmanufacturing industries plan a 6.

0-percent increase in spendingin 1985, to an annual rate of $187.2 billion; the latest estimate ofspending for 1984 indicates an increase of 12.0 percent from 1983. Thelargest increase in 1985 is planned in gas utilities, 16.6 percent.Smaller increases are planned in “commercial and other,” 8.

1percent; railroads, 8.0 percent; air transportation, 7.0 percent; andmining, 4.9 percent. Declines of 2.7 percent and 0.

5 percent areplanned in electric utilities and “other transportation,”respectively. Current-dollar spending in nonmanufacturing increased 2.0 percentin the third quarter of 1984, to an annual rate of $178.6 billion,following a 2.7-percent increase in the second quarter.

Nonmanufacturingindustries plan a 2.1-percent increase in the fourth quarter, andincreases of 5.2 percent and 0.9 percent in the first and secondquarters of 1985, respectively. Real spending by nonmanufacturing industries is estimated toincrease 5.2 percent in 1985; the latest estimate of spending for 1984indicates an increase of 11.

7 percent from 1983. Increases in 1985 areplanned in “commercial and other,” 7.7 percent, and mining,4.7 percent; slight declines are planned in public utilities andtransportation.

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