Companies in U.S. Plan to Raise Capital Spending, Survey Shows

More companies in the U.S. plan to increase spending on new equipment over the next 12 months after sales and profits improved, according to a quarterly survey of economists.

The percentage of businesses projecting to boost capital investments exceeded the share intending to cut spending by 33 points, up from 25 points in July, according to a survey by the National Association for Business Economics. Fifty-nine percent of respondents said sales rose in the third quarter, the most since January 2006 and up from 52 percent in the group’s previous survey.

“The recovery from the Great Recession continues, with business conditions improving,” William Strauss, a senior economist at the Federal Reserve Bank of Chicago who analyzed the results, said in a statement.

In contrast to the capital spending plans, about half of those surveyed said they see no change in employment over the next six months. The number projecting to increase hiring was unchanged at 39 percent, and fewer said they will cut jobs.

Profit margins climbed in the most recent quarter at 39 percent of companies responding, up from 25 percent in the last survey. Those reporting increased spending on equipment jumped to 37 percent, the highest since 2008, from 24 percent in July.

The report contained some unnerving news for Fed policy makers who are concerned that inflation is too low. While the proportion of firms planning to raise prices over the next three months is about the same as in the July survey, 21 percent said they will keep the increase to 5 percent or less, up from 14 percent in the prior poll.

Central bankers, who meet Nov. 3, are considering ways to ease monetary policy and help reduce unemployment. Chairman Ben S. Bernanke said this month that there appears to be a “case for further action.”

The NABE survey, taken from Sept. 21 to Oct. 6, included responses from 74 members of the business economists group.

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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