U.S. Corporate Treasurers Anticipate Spending More Cash

Companies in the U.S. are spending their cash and expect to spend even more in the coming quarter, according to the AFP Corporate Cash Indicators (AFP CCI).

Corporate treasurers surveyed indicated that U.S. businesses had sharply slowed the accumulation of short-term cash during the third quarter to the point that their cash holdings were smaller than they had been a year earlier.

As predicted last quarter, the burst in cash accumulation that we saw over the summer was short lived. For the third quarter of 2014, the indicator measuring the quarterly change in cash holdings is down six points from the July reading at +6.

The year-over-year indicator dropped a full 31 points from +27 to -4 showing that U.S. companies are putting their cash hoards to work.

In the coming quarter, corporate treasurers do anticipate spending more cash.  The forward-looking indicator measuring expectations in the change of cash holdings dropped from +10 to -3 indicating that more companies anticipate contracting their short-term cash holdings than building cash.

Meanwhile, the indicator for short-term investment aggressiveness dropped from +2 to zero, indicating that companies have not changed their stance in terms of permissible short-term investments, though some have become very slightly more aggressive.

“This is more than a blip in spending,” said Jim Kaitz, AFP’s president and CEO.  “Despite recent scares, U.S. businesses are indeed showing renewed enthusiasm.”

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