Businesses in the United States plan to spend $505 billion for new plants and equipment this year, an increase of 6.4 percent from 1989 spending levels, the Commerce Department says.
The department's Bureau of Economic Analysis also said its latest estimates for capital spending in the current year show businesses have put $475 billion into new plants and equipment, up 10.3 percent from 1988 spending levels.The revised third-quarter estimate for 1989 capital spending is $1.5 billion greater than previously reported.
Real capital spending, which is adjusted to remove price changes, is estimated to increase by only 4.9 percent in 1990 to $490 billion, the smallest increase since 1987, the department said.
The projected strength in capital spending levels for 1990 suggests a continued spending boom by industries seeking to upgrade their plants to compete better with foreign manufacturers, analysts said.
"These new numbers show that the capital spending boom is not over because firms are investing to cut costs and develop new products in order to compete in world markets," said Jerry Jasinowski, president of the National Association of Manufacturers.
"Those who argue that capital spending would be flat this coming year don't understand how the competitive environment has changed," he said.
Breaking out the spending projections for next year, the department said manufacturing industries plan to spend 3.8 percent more to upgrade or expand their facilities.
Industries specializing in durable goods production plan a 0.2 percent spending increase.
The largest planned purchases involve blast furnaces.