5.9% Hike in Capital Spending Due in ‘89, Far Below ’88 Level

inesses plan to spend more money on new plants and equipment in 1989, but the increase will be far less than the heady levels reached this year, the government said today.

The Commerce Department said a survey of businesses in October and November showed that they planned to raise real capital spending in 1989 by 5.9% to $451.64 billion after a revised increase of 10.8% this year.

Economists said the survey pointed to slower economic growth next year but nonetheless was a positive sign that companies see opportunities for expanding sales and exports.

The figures, reported in 1982 dollars to account for the effect of inflation, compare with a previous estimate for the 1988 investment increase of 11.6%.

If the 10.8% increase is realized this year, it would the strongest since a 16.6% expansion in business investment in 1984, the department said.

By contrast, business investment grew in 1987 at a real rate of 2.3% and shrank by 3.9% in 1986.

“The pace this year was simply unsustainable,” said David Wyss, chief financial economist for Data Resources Inc. in Lexington, Mass.

U.S. industry has benefited greatly from a devalued dollar that made U.S. goods cheaper abroad and stimulated exports to the point where companies were straining to produce more.

“The numbers suggest businessmen were a little less optimistic about 1989,” Wyss said. “We don’t think the numbers are consistent with recession, but certainly they’re saying there’s going to be much slower growth in both investment and the economy.”

The Federal Reserve Board said recently that businesses were running at 84.2% of capacity in November, the highest rate in nine years.