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Group: Capital Investment Growth Could Slow In 1988

December 23, 1987

NEW YORK (AP) _ Capital investment by manufacturers is likely to slow in 1988 due to financial market turmoil and a cooling of economic growth, a private business research group said Tuesday.

Capital appropriations by the nation’s 1,000 biggest manufacturers dropped by 4.3 percent in the third quarter from the previous three months, to $30.9 billion, according to the Conference Board.

Appropriations still are running ahead of actual spending, but the third quarter decline indicates growth in investment for expansion and modernization may be flagging, the group said in a news release.

″The widely expected slowing of overall economic growth, coupled with growing evidence of a levelling off in plant and equipment spending, point to a softening in manufacturing investment over the next few quarters,″ stated Kenneth Goldstein, a Conference Board economist. ″The outlook is further clouded by recent financial market turmoil, which may limit access to investment funds.″

The figures contrast with last week’s government report that indicated businesses planned to boost capital spending by 7.3 percent next year, more than three times the expected increase for 1987.

The Conference Board report stated third quarter appropriations indicated significant declines in capital investment for the paper, petroleum and non- electrical machinery industries, and sharp gains in investment by iron and steel, durable goods, fabricated metals and instruments manufacturers.

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