U.S. companies have started putting their huge cash hoards to work and will continue to do so, according to a survey of corporate treasurers by the
Association for Financial Professionals (AFP).
The association's corporate cash indicator, which measures the change in corporate cash holdings, plunged to negative 4 in the third quarter from positive 27 a year earlier. The figure is calculated by subtracting the percentage of decreases from the percentage of increases.
Corporate treasurers predict they will keep spending more cash, with the expected change in cash holdings for the fourth quarter registering negative 3, compared to positive 10 last quarter.
"This is more than a blip in spending," AFP President Jim Kaitz said in a statement. "Despite recent scares, U.S. businesses are indeed showing renewed enthusiasm."
He told the Financial Times that many corporate treasurers indicated their companies are spending on acquisitions or share buybacks, and some said they're spending on capital projects.
In an indication of how sluggish capital spending has been, non-residential fixed investment stands only 5 percent higher than seven years ago, according to the Financial Times. That has been holding the economy back.
Companies began stockpiling cash during the 2007-09 recession. Non-financial companies held a total of $2.58 trillion in cash and money-market funds as of June 30, according to the Federal Reserve. That represented a 12 percent increase from $2.3 trillion at the end of 2009.
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