U.S. businesses plan to spend $601 billion for capital goods in 1995, 9 (+/-3) (1) percent above 1994 levels, according to revised estimates reported today by the Commerce Department's Bureau of the Census. Estimates issued last February put the expected increase at 7 (+/-4) percent. The spending data for 1994 and 1995 are based on information collected in the new semiannual Investment Plans Survey (IPS). Business investment represents domestic expenditures for depreciable capital assets such as buildings and other structures, and machinery and other equipment. Spending in 1994 was estimated at $549 billion, revised down from $556 billion reported earlier.

Industry Details

Among the major business sectors, manufacturing now expects to spend about $182 billion in 1995, an increase of 26 percent from 1994. The durable goods sector plans include $101 billion in spending, while nondurables are estimated at $81 billion. Spending in the services sector is expected to be $117 billion, about the same as 1994. The Financial, Insurance and Real Estate sector significantly increased spending plans and is now expected to invest $47 billion in 1995, up from $37 billion in 1994. Combined, the wholesale and retail trade sectors account for 13 percent of planned spending, consistent with prior years. Public utilities, communication, and transportation companies together plan to spend $128 billion in 1995.

About this Survey

A stratified simple random sample of 30 thousand nonfarm companies was selected from a universe of about 2 million companies with five or more  paid employees. Survey questionnaires were mailed in June 1995. Estimates of 1994 preliminary expenditures are revised from those previously published in a February 23, 1995 release of Business Investment and Plans. A brief description of the statistical methodology follows.

Each company selected in the sample was asked to provide data by industry activity. Expenditures by companies unable to allocate expenditures by activity were categorized as Not Distributed by Industry (NDI). For 1995 revised planned investment and 1994 estimated investment, the NDI was 2.2  percent and 5.5 percent of the total capital expenditures, respectively. It can not be assumed that investment included in the NDI category would be distributed in proportion to the expenditures reported for specific industries. Investment for capital assets used in more than one of a company's industry activities was categorized as Serving Multiple Industries.

Estimates of expenditures were derived by adjusting sample weights associated with each company that reported total expenditures, to account for companies that did not report.  Since a company may not have reported total expenditures for both years, adjusted weights for a company may have differed for each year. Data reported by a company for a given year were multiplied by the company's adjusted weight for that year. Industry totals for a year were derived by summing these weighted values across companies reporting in the industry for the year. No adjustment was made for companies that reported total capital expenditures without industry detail.

The data in this report are subject to sampling variability as well as nonsampling variability.  Sources of nonsampling variability include errors of  response, non-reporting, and coverage.  Measures of sampling variability, presented as relative standard errors, are shown in the table.

The response rate for 1995 revised planned expenditures and 1994 estimated expenditures is 75 percent and 70 percent, respectively. These rates are based on total capital expenditures reported in each survey.

The data from the 1993 Annual Capital Expenditures Survey are available upon request. Contact: Charles Funk (301) 763-2542