Survey respondents say sales outlook, not taxes, to drive spending

U.S. companies expect their investment and hiring to grow at a slower pace in 2018, and only a small share say proposed tax legislation is driving their capital-spending decisions, according to a private survey.

The Institute for Supply Management’s semi-annual forecast showed factory purchasing managers see capital spending rising 2.7 percent in 2018, slower than the 8.7 percent gain reported for this year. Their counterparts at service providers project investment growth of 3.8 percent, also weaker than this year’s 7 percent advance. Less than half of respondents in both manufacturing and services said they’d raised wages to attract workers.

The survey, conducted in November, suggests that the economy will get less of a boost from business investment next year after strong capital spending helped push the pace of growth above 3 percent in the past two quarters. The findings also show companies are awaiting clarity about the proposed reduction in corporate taxes moving through Congress that the Trump administration and Republicans say will result in a sustained increase in the rate of expansion.

Were the tax plan to get passed and implemented, companies may adjust their 2018 investment projections, Anthony Nieves, chairman of the ISM non-manufacturing survey, said in a phone interview. For now, “no company is going to forecast based on hypothetical” tax benefits, he said.

Read more: Bloomberg

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