Economic Forecasts

Business Spending: Going Faster Unless Chip Shortages Intervene

Kiplinger’s latest forecast on business equipment spending

Capital equipment spending looks to be having a banner year. Expect 15% growth this year, compared with just 0.2% last year. New orders will rise a similar amount. Purchases of machinery are robust, as are computer sales. However, some sales of electronics, motor vehicles and machinery are being temporarily slowed by the shortage of semiconductors. Businesses are responding to rising demand by implementing expansion plans, though large firms are more enthusiastic than small firms at this time.

Likely beneficiaries of the spending binge include makers of industrial robots and 3D printers. Workers are in short supply in manufacturing. Robots can help, and they reduce the need for worries about social distancing among workers. 37% of U.S. assembly plants plan to invest in 3D printers, a record high. Interest is also high in collaborative robots, which work in close contact with humans instead of as stand-alone ‘bots. 31% of assemblers are currently using the technology or plan to within the next year, and 17% within two to three years.

A boost for purchases of oilfield equipment seems likely, now that the price of West Texas Intermediate crude oil has surpassed $60 per barrel, its highest level since the beginning of 2020. The number of active drilling rigs has been on a steady upward path since the beginning of October.

Sources:

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