Interesting article from Reuters:
- According to a Thomson Reuters analysis, 70 percent of the 227 S&P companies that have so far announced 2014 spending plans have exceeded Wall Street’s expectations.
- The highest level in at least five years
- The average capital expenditure for the year is about $1.71 billion, according to the Thomson Reuters data.
- That is up only 2% from last year’s $1.68 billion, analysts on average had been predicting spending to fall nearly 4 percent from 2013
Strategists say
- Receding concerns about the U.S. fiscal budget
- Improving outlook from the euro zone
- A need by companies to make sure their production capacity keeps up with rising demand
- U.S. companies are currently using roughly 78.5 percent of their production capacity
- That’s near the highest levels since the recession and up substantially from June 2009’s record low of under 70 percent
“We’re approaching 80 percent (on capacity utilization) and that’s usually the mark where they’re starting to feel some pressures to add a little bit more capacity into the equation,” said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.
