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PwC: Bright economic outlook spurs stronger capital investment at private companies

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PwC: Bright economic outlook spurs stronger capital investment at private companies

Nearly three in five private companies are confident about the U.S. economy, continuing their 18-month optimism streak.

Fifty-nine percent of private-company leaders are optimistic about U.S. economic prospects for the next 12 months, according to PwC US's latest Trendsetter Barometer. 

The majority of these executives have felt upbeat about the domestic economy for a full year and a half. This confidence is translating into plans for major capital spending projects by more than one-third of Trendsetter companies, the highest number in over two years. The majority (56%) of survey respondents also plan to hire in the next 12 months, though in moderation.

"Private businesses see resilience in the economic recovery, both at home and globally."Private companies that sell abroad are feeling positive as well. 92 percent believe that the world economy is either growing or staying the same. Only 8% of these companies – the lowest percentage in years – describe the global economy as slowing.

"Private businesses see resilience in the economic recovery, both at home and globally," says Rich Stovsky, U.S. leader of PwC's Private Company Services practice. "This confidence is evident in the survey respondents' strong revenue growth projections, which they put at over 8 percent for the next 12 months, with more than one-third of them expecting double-digit growth during that period."

Capital Spending Is Climbing

Private-company leaders say they plan to invest an average of 8.4% of their sales in capital projects over the next twelve months, signaling a real bet on long-term growth. Just once in the past several years have we seen so high a level of spending commitment (10% in 3Q13).

"During the economic downturn, we saw opportunistic companies invest strategically in capital projects to gain a competitive edge and spur faster growth," says Ken Esch, a partner in PwC's Private Company Services practice. "Now that the economy has stabilized, many of their peers are playing catch-up, investing in deferred maintenance, infrastructure upgrades, and emerging technologies to enhance their own growth."  

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