EMBARGOED UNTIL: 12:01 A.M. EDT, MAY 5, 2000 (FRIDAY)

Public Information Office                              CB00-77         
301-457-3030/301-457-3670 (fax)  
301-457-1037 (TDD)
e-mail: pio@census.gov

Jim Barron/Charles Funk/Sara Prebble
301-457-3324

           U.S. Businesses Invested Record $974 Billion in 
            Capital Goods in 1998, Census Bureau Reports
                                
  U.S. businesses invested a record $974 billion in capital goods in 1998,
according to a report released today by the Commerce Department's Census
Bureau. The 1998 total represents an increase of 12 percent from 1997 and
follows an 8 percent increase in 1997 from 1996.

  Businesses with employees accounted for 90 percent of all 1998 capital
investment, spending $879 billion. About two-thirds of this, or $565
billion, was spent on new machinery and equipment, an increase of 9
percent from 1997.  Investment in information-processing equipment,
including computers and communications equipment, was $184 billion,
followed by transportation equipment, primarily cars and light trucks, at
$157 billion, and industrial equipment, at $143 billion.

  Businesses with employees spent $290 billion for structures. Investment
in new buildings and structures totaled $251 billion; $91 billion of which
was used for remodeling, renovation and modernization. Of the $148 billion
spent on construction of new facilities, $27 billion, or 18 percent, was
used for utility structures and facilities, $23 billion, or 15 percent,
for industrial buildings, $21 billion, or 14 percent, for commercial
buildings, including shopping malls, and $19 billion for mine shafts and
wells. Businesses also spent $48 billion on acquiring existing facilities,
both new and used.

  The report, Annual Capital Expenditures: 1998, ACE/98, defines capital
goods as items with an expected use of more than one year, which ordinarily
are depreciated by businesses. They include buildings and other
structures, machinery and equipment, furniture, and computers and
vehicles. While the report shows estimates of investment by all nonfarm
businesses, only businesses with employees were asked to report investment
by type of structure, type of equipment and industry sector.

  Industry highlights:

  - Manufacturing led all industry sectors in spending on capital goods
with $207 billion, or nearly 24 percent of total expenditures. Investment
spending by durable goods manufacturers totaled $119 billion, or 57
percent, of the manufacturing total. Most of their investment, $100
billion, was for equipment. Within the durable goods sector, the
communication equipment and electronic components industry spent the most
on capital goods, $28 billion. Nondurable goods manufacturers spent $88
billion on capital goods. Chemical products (excluding drugs) at $22
billion and food products (excluding beverages) at $13 billion, together
accounted for nearly 40 percent of the total of nondurable capital
expenditures in 1998.
  
  - The services sector accounted for $182 billion, or 21 percent, of
total capital expenditures. The leading industry spenders in this sector
were automotive and truck rental and leasing businesses, at $32 billion,
and hospitals, at $25 billion. Together they accounted for nearly
one-third of capital goods expenditures in the services sector. The
industry with the largest dollar increase from 1997 in this sector was
computer programming and data-processing services. Total capital
expenditures for that industry were up nearly $3 billion from 1997, a 23
percent increase.

  - The finance sector spent $110 billion on capital goods, an increase
of nearly 21 percent from 1997. Expenditures for structures nearly doubled
from $13 billion in 1997, to $24 billion. Nondepository credit
institutions spent $68 billion on capital goods, accounting for 62 percent
of this sector's spending.

  - The communications services sector invested $78 billion on capital
goods in 1998. Virtually all of this sector's spending was for
infrastructure, that is, communication structures and facilities and
information-processing equipment.

  The report shows capital investment spending by nonfarm businesses for
structures and equipment in 97 separate industry categories. The data are
used to identify trends in capital expenditures, analyze business asset
depreciation and improve estimates of capital stock for productivity
analysis.

  The data in the report are subject to sampling variability, as well as
nonsampling error. Sources of nonsampling error include errors of
response, nonreporting and coverage. Further details concerning survey
design, methodology and data limitations are available in the full report.