JACKSON - Companies remain reluctant to invest in new or expanded facilities, despite improving economic conditions and corporate earnings outlooks.
Economists expect that corporate investment spending will accelerate next year if the economy continues to strengthen. But for now, many companies - particularly manufacturers - are still limiting or freezing their capital spending.
"There's no change anywhere yet," said Bob Allsbrook, chief economist at AmSouth Bancorp. "Companies are not looking yet in an active way. They're more interested in making do with what they have right now."
That reluctance has been evident since the Sept. 11, 2001, terrorist attacks, after which many businesses - already hit by declines in the stock market - cut investment spending or began idling plant capacity. Consequently, 2002 capital investment nationwide in projects like new factories or distribution centers fell 29 percent, its steepest drop since 1989, according to Conway Data's New Plant Database.
In Mississippi, the drop was even more precipitous - 42 percent - partly because of comparisons to 2001 when construction began on Nissan's new plant in Canton and on facilities for its suppliers.
The pace of expansion appeared to pick up in September and early October, the Federal Reserve said this week.
But the Fed, whose report is based on comments from businesses and business observers, also said commercial real estate markets remain sluggish.
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