Spending By U.S. Businesses for Durable Goods Looks Strong for 2013
As a supplier of printer cartridges VTPI’s growth potential is tied in some part to the economic outlook, particularly as it relates to business spending. From this perspective, VTPI’s growth potential is looking pretty solid because the general forecast for business spending on things like computers, printers and consumables is very positive.
A recent report from the New York Times confirmed as much. According to the report, orders for long-lasting factory goods rose in June, bolstered by an increase in aircraft demand and more business spending. The increase suggests that American companies are more confident in the economy and could increase economic growth in the second half of the year. The Commerce Department said on Thursday that orders for durable goods increased 4.2% last month. That followed a 5.2% gain in May, which was revised higher.
Most of the gain occurred because aircraft orders, which are volatile month to month, jumped 31.4% Boeing said it received orders for 287 planes in June, up from 232 in May. Excluding autos and airplanes, orders were unchanged. Orders that signal planned business investment, which exclude volatile transportation and military orders, increased in June for the fourth straight month. The 0.7% gain last month was buoyed by more machinery demand. And orders in May were much stronger than previously reported.
Even with the gain, business investment is not likely to help economic growth in the April-June quarter, economists said. That is because the government measures shipments, rather than orders, when calculating business investments’ contribution to growth. Shipments fell in June. But the increase in orders this spring suggests shipments will rise in the July-September quarter and add to growth. Jonathan Basile, an economist at Credit Suisse, said rising orders were a “recipe for a speedup in manufacturing and business investment” in the third quarter.
Durable goods are items meant to last at least three years, like computers, industrial machinery and appliances. Profit from companies in the Standard & Poor’s 500 Index will exceed $120 a share by next year, double the level in 2008, according to Wall Street estimates. That’s the biggest increase since the 142% gain during the rally in technology stocks from 1993 to 1999.
48% of investors reported that capital expenditures are the best use of corporate cash -- the highest reading since April 2011, according to a survey conducted last month by Bank of America Merrill Lynch. “We see the continued elevated level of corporate profits as the clearest tailwind for investment growth this year,” David Mericle, an economist at Goldman Sachs Group Inc. in New York, wrote in a Feb. 15 research report.
A robust business spending outlook coupled with VTPI’s robust operational performance can only translate into one thing: gain potential. That gain potential is yours for the taking, so begin your research on VTPI right now.
