Business Spending Gets a Bounce

Capital spending is bouncing back sooner than expected, but it won’t fully recover until next year. Both because of the slowdown in the global economy, and because the efforts to contain the coronavirus will take time, businesses will mostly adopt a wait-and-see attitude before committing to expansion plans.

Still, spending is rising as businesses reopen and attempt to reestablish normal operations. The surge in motor vehicle production has benefited metals and parts makers, for instance. In the energy sector, oilfield rigs are no longer being shut down, and the number of active rigs has stabilized now that West Texas Intermediate crude oil has reached $40 a barrel. That may mean a modest boost for purchases of oilfield equipment.

Sources:

• Census Bureau, Durable Goods Report
• Census Bureau, Business Inventories