Henderson: Global acceleration watch - US business investment

Reasons for expecting investment to strengthen include: corporate profits have recovered since late 2015; corporate bond yields have fallen significantly; capacity utilisation is little changed despite sluggish growth; money holdings of non-financial businesses are rising solidly (by 5.8% in the year to June); the corporate liquidity ratio (i.e. liquid assets divided by short-term liabilities) is above its historical average; so is Tobin’s Q ratio (i.e. the market value of equity is high relative to the replacement cost of assets, implying an incentive to invest); and capital spending cuts in the energy sector have ended.

Equipment spending accounts for 46% of business investment. Industrial output of business equipment rose in the second quarter and was stable in the third quarter. This increase suggests that next week’s third-quarter GDP release will report a recovery in equipment spending following three quarterly falls – see first chart.



Structures investment accounts for a further 21% of the business total and has been depressed by a collapse in mining exploration. The industrial output component covering oil and gas well drilling, however, rose in the third quarter, suggesting that mining and overall structures investment returned to growth – second chart.



Spending on “intellectual property products”, mainly software and R&D, accounts for the remaining 33% of business investment. It rose by 4.8% in the year to the second quarter and is likely to have continued to grow strongly in the third.

Die Wertentwicklung in der Vergangenheit ist kein zuverlässiger Indikator für die künftige Wertentwicklung. Alle Performance-Angaben beinhalten Erträge und Kapitalgewinne bzw. -verluste, aber keine wiederkehrenden Gebühren oder sonstigen Ausgaben des Fond.

Die Informationen in diesem Artikel stellen keine Anlageberatung dar.