RPT-Fitch: U.S. Corporate Capex Growth Flat in 2014
Sept 23 (Reuters) - (The following statement was released by the rating agency)
Capital expenditures for a study sample of 361 U.S. corporate issuers will grow a modest 1.4% in 2013, but decline 1.4% in 2014, according to a new Fitch Ratings special report.
Through the last-12 months ending June 30, 2013 capital expenditure in aggregate for this company sample increased 0.1%. Spending strength in 2013 has been strongest in the chemical, homebuilding and natural resources sectors.
Accordind to Fitch's report, expected decline in capital expenditure in 2014 is driven largely by modest declines in capital intensive sectors such as energy, utilities, power and gas (UPG) and telecommunications. Fitch believes that the U.S. corporate sector aggregate capital expenditure levels are normalizing from stimulus influenced 'catch-up' post-recession spending to more normal demand driven levels.
When comparing capital expenditure to revenue, Fitch calculates that the ratio peaked in 2012 at 7.2%, and forecasts it to remain steady for 2013, but decline in 2014 to 6.8% and 6.4% in 2015. This compares to a Fitch calculated level of 5.9% in 2010 and 6.4% in 2011. The rapid change in this ratio between 2010 and 2012, when viewed alongside weak gross domestic product (GDP) figures, shows that the growth of capital expenditure in 2011 and 2012 was outpacing revenue growth, and more generally, demand. However, with the recovery from under-spending in the recession, long-term capital spending patterns will revert to revenue driven momentum in a stable economy.
The report, 'U.S. Corporate Capex Study: Trends are Relatively Flat for 2014', addresses the trend of capital expenditure for a 361 U.S. corporate company sample, in aggregate and by sector, over the time period 2011 - 2015. The full report is available on Fitch's web site at 'www.fitchratings.com'.
Link to Fitch Ratings' Report: U.S. Corporate Capex Study: Trends Are Relatively Flat for 2014
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