American businesses, battered by recession and record levels of idle production capacity, will spend 4.8 percent less this year on new plants and equipment, after adjustment for inflation, than they did in 1981, the Commerce Department reported yesterday.
According to a survey of investment intentions conducted in late October and November, such spending will continue to fall in real terms, though at a slower rate, through the first half of 1983 as well, the department said.
The report is roughly in line with a number of private economic forecasts that show business fixed investment falling about 5 percent next year, and underscores the fact that investment will continue to decline for some time even if a general economic recovery does begin this winter.
It also indicates the failure of the investment tax incentives passed in 1981 as part of the Reagan administration's economic recovery program to stimulate business outlays for new plants and equipment in the face of weak or declining markets, high interest rates and large drops in profit margins, analysts said.
Separately, the Labor Department said that the number of initial claims filed for unemployment benefits fell to a seasonally adjusted 598,000 in the week ended Nov. 27, down from 654,000 the week before. The number of persons receiving regular state benefits fell even more sharply, from 4,840,000 to 4,570,000 in the week ended Nov. 20.
However, analysts said the numbers are distorted by holidays and other factors this time of year. "We have no external confirmation" of any development that would account for a sharp drop in joblessness late last month, said economist Alan Greenspan of Townsend-Greenspan & Co. "Since we know there are problems in holiday weeks, we have reason to believe the number may be reversed" as later data is available, he said.
As the recession has progressed this year, businesses have repeatedly revised their investment plans downward, the Commerce Department said. Initially, in a March survey, businesses reported they planned to spend 7.3 percent more on plants and equipment this year than in 1981 including allowances for inflation. By June that had dropped to 2.2 percent, and in September to only 0.7 percent. The latest figure, based on investment of $320 billion, represents a 0.5 percent decrease compared to last year.
In real terms, the largest declines this year will be for mining, down 12.5 percent, and for the much larger group, durable goods manufacturing, down 8.2 percent. Nondurable manufacturing investment will be 5.6 percent lower, while total nonmanufacturing will be down 3.5 percent. Of all the major industry groupings, only public utilities will show a gain, up 1.8 percent.
If the predicted economic recovery does not occur soon, spending plans for next year could well be cut as they were this year. The latest survey indicated plans to reduce spending 0.5 percent in real terms between this quarter and the second quarter of 1983.
Businesses will be asked about their plans for all of next year beginning with the February survey.