Strong demand for manufactured goods during the last four months of 1976 lifted capital appropriations by the 1,000 largest U.S. corporations to a near record, The Conference Board said yesterday.
The board, a business-sponsored research group said capital appropriations by the corporations surveyed in the fourth quarter of 1976 totaled $15.31 billion, a 33 per cent gain from the third quarter and just under the record $16.38 billion appropriate in the third quarter of 1974.
Capital appropriations represent authorizations to spend money for new plants and equipment, as opposed to capital expenditures, which are actual outlays.
Economist Elliot Grossman of the Conference Board manufacturers pushed ahead with spending plans when it appeared certain that President Carter would advocate raising the investment tax credit from 10 to 12 per cent.
Most of the funds appropriated in the fourth quarter will not be spent until 1977 or 1978, Grossman said.
The effects of miserable weather in January and February may have obsecured not only manufacturers' substantial increases in capital appropriations but also stronger demand for many products, Dow Jones News Service suggested.
The National Association of Purchasing Management's February survey of purchasing managers found that new orders from manufacturers picked up last month, but weather conditions slowed both production and delivery.
Beyond that, the purchasing managers noted that prices for basic industrial commodities continued to rise in February, and they're "already bracing" for new pressures" as higher fuel and other costs attributed to the weather ripple through economy."
They specifically reported higher prices for aluminum, copper, lead, steel, tin, large or special forgings and castings, large electric motors, circuit breakers, fuels, lumber, bearings, paper and paper products, rubber, chemicals - particularly solvents - ink, plastics and fasteners.
For 1977, The Conference Board said it expected capital spending appropriations would reach $62.6 billion, up 24 per cent from last year. It projected appropriations of $69.3 billion in 1978, an 11 per cent gain over 1977.
Actual capital spending also will rise. It projected actual capital spending this year would total $50.8 billion, an 8 per cent gain over 1976. For 1978, it projected spending of $59.1 billion up 16 per cent over 1977.
The survey showed that of 17 industries studied, 9 raised appropriations in the fourth quarter last year.
The increases ranged from 19 per cent in iron and steel to 91 per cent in chemicals.
Appropriations by producers of non-durable goods rose to $9.3 billion, a 57 per cent increase over the third quarter, and durable goods appropriations totaled $6 billion, increasing 7.3 per cent over the third quarter.
Among the durables those showing increases were motor vehicles and equipment, other transportation equipment, stone, clay and glass, lumber and furniture.