Surprise: Big U.S. energy companies didn’t slash capital expenditures in the fourth quarter — and in fact, business investment by major companies overall hit new records in December.
Companies in the S&P 500 reported capital spending of $192 billion in the fourth quarter, up 10.3% from third quarter and up 17% from fourth-quarter 2013, according to S&P Dow Jones Indices.
For the year, capex rose 16.3% from 2013 to $681 billion — which even beats 2001′s inflation-adjusted $637 billion, Senior Index Analyst Howard Silverblatt notes. The data reflect reported results from 95% of the index’s companies.
The energy sector stayed hot, clocking its own record and spending 19.5% more than it did in third quarter, while remaining the biggest chunk of the index’s overall figure at about a third.
The Wall Street Journal reported an increase in capital spending among big companies earlier this month using data for a smaller group of companies in the index.
The S&P data reflects global spending, which means it’s of limited use in forecasting the U.S. economy. Many large U.S. companies generate a third or more of their business outside the country.
And there’s little doubt pullback is coming from energy companies, of course: Plenty of oil and gas companies have announced plans to slash spending, including Chesapeake Energy, which said it would reduce investment by more than a third in 2015, and Pioneer Natural Resources, which said it would cut capital spending by half.
Figures from Wolfe Research early this month indicated energy companies planned to cut capital spending by 30% overall, with the steepest cuts from oil exploration and production companies and smaller cuts from gas producers and integrated oil companies.
But last quarter, despite a 6.5% drop from fourth-quarter 2013, Chevron still led the S&P 500 in business investment, at $35 billion, Silverblatt said, while Exxon Mobil followed at $33 billion, down 2.1%. AT&T and Verizon came next, with spending up slightly at $21.4 billion and $17.2 billion.
Separately, Silverblatt said cash and equivalents held by S&P 500 companies also set a new record at the end of the fourth quarter, at $1.33 trillion — up from $1.25 trillion at the end of the third quarter and enough to match 82 weeks of estimated operating income for companies in the index.
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