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Plant and equipment expenditures.

BUSINESS plans to spend $333.4 billion for new plant and equipment in 1985, 8.4 percent more than in 1984, according to the survey conducted in late October and November (tables 1 and 2, and chart 5). The latest estimate for 1984 spending is $307.6 billion, 14.3 percent more than in 1983, and is essentially unchanged from that reported in September for the survey conducted in lae July and August.

Real spending--capital spending adjusted to remove price changes--is estimated to increase 6.8 percent in 1985. The latest estimate of real spending for 1984 indicates an increase of 13.3 percent from 1983; real spending decline 3.6 percent in 1983 (tables 2 and 3). Estimates of real spending are computed from the survey data on current-dollar spending plans and from estimated capital goods price deflators prepared by BEA. The laest deflators developed by BEA indicate that capital goods prices will increase 1.5 percent in 1985, following a 0.8-percent increase in 1984; capital goods prices declined 1.3 percent in 1983.

Current-dollar spending in the third quarter of 1984 increased 3.4 percent, to an annual rate of $313.1 billion, following a 3.3-percent increase in the second quarter; third-quarter spending was 1.0 percent lower than planned spending reported 3 months ago. Plans reported in the latest survey indicate a 2.6-percent increase in the fourth quarter, and increases of 5.1 percent and 2.1 percent in the first and second quarters of 1985, respectively.

Real spending increased 3.1 percent in the third quarter of 1984, following a 2.6-percent increase in the second quarter. Estimates indicate a 2.3-percent increase in the fourth quarter, a 4.9-percent increase in the first quarter of 1985, and a 1.7-percent increase in the second.

Manufacturing Programs

Manufacturing industries plan an 11.6-percent increase in current-dollar spending in 1985, to an annual rate of $146.2 billion; the latest estimate of spending for 1984 indicates an increase of 17.5 percent from 1983. Durable goods indusries plan a 13.9-percent increase in 1985 and nondurables, a 9.5-percent increase. In durables, the largest increases are planned in motor vehicles, 30.0 percent; iron and steel, 19.6 percent; and electrical machinery, 15.5 percent. In nondurables, the largest increases are planned in food-beverage, 17.6 percent; rubber, 15.6 percent; and paper, 13.6 percent. A decline of 5.3 percent is planned in textiles.

Current-dollar spending in manufacturing increased 5.3 percent in the third quarter of 1984, to an annual rate of $134.5 billion, following a 4.0-percent increase in the second quarter. Durable goods industries increased spending 8.7 percent in the third quarter and nondurables, 2.4 percent. Manufacturers plan a 3.4-percent increase in the fourth quarter, and increases of 5.0 percent and 3.6 percent in the first and second quarters of 1985, respectively.

Real spending by manufacturers is estimated to increase 9.0 percent in 1985--10.5 percent in durables and 7.4 percent in nondurables. The latest estimate of real spending in manufacturing for 1984 indicates an increase of 15.6 percent from 1983.

Nonmanufacturing Programs

Nonmanufacturing industries plan a 6.0-percent increase in spending in 1985, to an annual rate of $187.2 billion; the latest estimate of spending for 1984 indicates an increase of 12.0 percent from 1983. The largest increase in 1985 is planned in gas utilities, 16.6 percent. Smaller increases are planned in "commercial and other," 8.1 percent; railroads, 8.0 percent; air transportation, 7.0 percent; and mining, 4.9 percent. Declines of 2.7 percent and 0.5 percent are planned in electric utilities and "other transportation," respectively.

Current-dollar spending in nonmanufacturing increased 2.0 percent in the third quarter of 1984, to an annual rate of $178.6 billion, following a 2.7-percent increase in the second quarter. Nonmanufacturing industries plan a 2.1-percent increase in the fourth quarter, and increases of 5.2 percent and 0.9 percent in the first and second quarters of 1985, respectively.

Real spending by nonmanufacturing industries is estimated to increase 5.2 percent in 1985; the latest estimate of spending for 1984 indicates an increase of 11.7 percent from 1983. Increases in 1985 are planned in "commercial and other," 7.7 percent, and mining, 4.7 percent; slight declines are planned in public utilities and transportation.
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Author:Seskin, Eugene P.
Publication:Survey of Current Business
Date:Dec 1, 1984
Words:741
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