Bureau of the Census For Release 8:30 A.M. EDT Charles Funk Friday, September 22, 1995 Irving Copeland CB-95-173 (301) 763-2542 IPS(95)-2 BUSINESS INVESTMENT AND PLANS 1993 to 1995 (All dollar figures in text are in current dollars) Summary 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 (1) The statement "9 (+/-3) percent increase," appearing in the text, indicates the range (+6 to +12 percent) in which the actual percent change is likely to have occurred. The range given for the percent change is a 90 percent confidence interval that accounts only for sampling variability. If the range had contained zero, it would have been uncertain whether there was an increase or decrease; that is, the change would not have been statistically significant. For any comparison cited without a confidence interval, the change is statistically significant. * * * This release is available electronically the day of the release through the Department of Commerce's Economic Bulletin Board (202-482-3870) and through the Census Bureau's online information service -- CENDATA. CENDATA is available from Dialog Information Services, Inc. (1-800-334-2564) and Compuserve (1-800-848-8199). The release is also available on Internet. For further information regarding electronic releases, call (301-457-1242). The next press release, containing year-end estimates for 1995 and plans for 1996, is scheduled for February 22, 1996 at 8:30 A.M. ***************************************************************************** Business Investment and Plans Table 1. Capital Expenditures Estimates (1993-1995) Industry Standard Capital Expenditures Description Industrial (Millions of dollars) Classification Revisions Preliminary Final (SIC) Code 1995(1) 1994(2) 1993(3) Total expenditures 600,738 549,001 489,682 Sum of expenditures: By industry 587,269 518,637 488,249 Not distributed by industry 13,469 30,364 1,433 Mining and construction 10-17 35,597 34,851 31,227 Manufacturing 181,830 144,145 134,066 Durable goods 24-25,32-39 100,592 76,084 66,361 Nondurable goods 20-23,26-31 81,238 68,062 67,705 Transportation 40-42,44-47 37,011 32,327 30,610 Communications 48 49,287 44,625 37,050 Utilities 41,833 37,975 41,257 Electric 491 21,385 21,029 21,029 Gas transmission, distribution, and other utilities 492-497 20,448 16,947 20,228 Wholesale and retail trade 75,710 68,129 60,316 Wholesale trade 50-51 19,557 16,590 18,963 Retail trade 52-59 56,153 51,539 41,353 Finance, insurance and real estate 47,067 36,870 40,242 Finance 60-62,67 25,228 22,243 26,024 Insurance and real estate 63-65 21,839 14,627 14,218 Services 117,316 118,506 111,760 Personal and business services, including agricultural 07-09,70-79 60,764 62,759 57,376 services Health services 80 32,582 30,760 30,857 Social, educational and other professional services 81-87,89 23,969 24,986 23,527 Expenditures serving multiple industries (X) 1,617 1,209 1,722 (1) Revised estimates collected from the September, 1995 Investment Plans Survey (IP-2). (2) Preliminary estimates collected from the February, 1995 Investment Plans Survey (IP-1). Final data are scheduled to be published in January, 1996 in the 1994 Annual Capital Expenditures Survey. (3) Estimates collected from the 1993 Annual Capital Exepnditures Survey. (X) Not Applicable Business Investment and Plans Table 2. Relative Standard Errors for Capital Expenditures Estimates Industry Standard Relative Standard Errors Description Industrial (Percent) Classification Revisions Preliminary Final (SIC) Code 1995(1) 1994(2) 1993(3) Total expenditures 2 3 1 Sum of expenditures: By industry 2 3 1 Not distributed by industry (X) (X) (X) Mining and construction 10-17 8 13 4 Manufacturing 4 4 2 Durable goods 24-25,32-39 7 6 2 Nondurable goods 20-23,26-31 4 4 2 Transportation 40-42,44-47 8 8 5 Communications 48 10 15 5 Utilities 4 4 1 Electric 491 5 6 2 Gas transmission, distribution, and other utilities 492-497 7 5 2 Wholesale and retail trade 5 5 3 Wholesale trade 50-51 6 7 5 Retail trade 52-59 6 6 3 Finance, insurance and real estate 9 5 4 Finance 60-62,67 6 7 5 Insurance and real estate 63-65 18 9 6 Services 4 6 4 Personal and business services, including agricultural services 07-09,70-79 7 10 7 Health services 80 4 4 2 Social, educational and other professional services 81-87,89 7 7 7 Expenditures serving multiple industries (X) 12 12 3 (1) Revised estimates collected from the September, 1995 Investment Plans Survey (IP-2). (2) Preliminary estimates collected from the February, 1995 Investment Plans Survey (IP-1). Final data are scheduled to be published in January, 1996 in the 1994 Annual Capital Expenditures Survey. (3) Estimates collected from the 1993 Annual Capital Exepnditures Survey. (X) Not Applicable