Economic Forecasts

Business Spending: Getting Ready for a Return to Normalcy

Kiplinger’s latest forecast on business equipment spending

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2022 should be the year that sees a slowdown in COVID-19 infections, and when supply chain issues work themselves out. Manufacturers will continue to purchase machine tools and other equipment, so that they will be ready to ramp up production when they can.  Prices of steel and other raw materials should ease next year. Though 2022 won’t see business spending grow by the lofty 13% expected for 2021, investment in equipment should still rise by a robust 7%. Software: Up 5%.

Semiconductor shortages have reached their peak, and are beginning to gradually improve, but they will still be felt next year. These shortages have limited the sales of electronics, motor vehicles and communications equipment. Worldwide chip production capacity is expanding—good for sales of semiconductor manufacturing equipment. The auto industry will suffer the longest, as it uses older semiconductors, and only a few new manufacturing facilities will be built for these. But the industry’s needs will most likely be met by the end of 2022.

Spending on industrial robots is rising 35% from a year ago. Workers are in short supply in manufacturing. Robots can help, and they also reduce the need for social distancing among workers. Interest in collaborative robots is also high. These work in close contact with humans instead of as stand-alone ‘bots.

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