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Study shows increase in business capital investment

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Study shows increase in business capital investment

More investment, fewer jobs created.

US business investment projects accounted for $166 billion in capital investment in 2015, according to an annual report prepared by professional services firm EY. Over 5,400 business investments were announced in 2015 and are expected to create or retain more than 402,000 jobs in the US.

Although the total amount of capital is $16 billion higher than the previous year, there was a 2% decrease in the total number of projected jobs.

In total, nondurable manufacturing represents over half the announced capital investments in 2015."Many factors contribute to a company's decision to invest in a particular location, and awareness of industry trends, workforce development levels and the availability of state and local tax incentives can help businesses choose where to locate their mobile capital investments," said Andrew Phillips, Principal, Ernst & Young LLP. "States should continue to find their competitive edge to attract a wide variety of investment types and maintain a healthy economy."

The report focuses on US and foreign companies' mobile capital investments, which are not tied to specific markets or geographies. Mobile capital investments include headquarters facilities, data and call centers, manufacturing facilities, distribution centers, and research facilities, which have a wide range of location options. Companies continue to pursue locations with high supply chain potential, low input costs, strong business incentives, growing industry clusters, and advantageous state and local tax systems. Because companies research and analyze the relative merits of different locations before deciding where to invest, these mobile capital investments serve as indicators of a region's or state's long-term economic growth potential and competitiveness.

Projects capturing high amounts of investment include chemical manufacturing facilities, which account for nearly 40% of all investment, followed by motor vehicle manufacturing and machinery manufacturing facilities. Over 70% of the investment in chemical manufacturing is from new liquefied natural gas export facilities. In total, nondurable manufacturing represents over half the announced capital investments in 2015.  Durable manufacturing also plays a strong role, with industries including machinery, motor vehicle and semiconductor manufacturing accounting for approximately $45 billion in investment announcements. States along the Gulf Coast continue to attract the greatest amounts of mobile capital investment among project types tracked in the study. For the fifth year in a row, Texas and Louisiana received more than 30% of all announced investment.

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