Perspective

Is business investment boosting productivity?


Companies were routinely criticized for rewarding shareholders rather than investing in new plant and equipment in the years before the pandemic. This is starting to change. Corporate investment – or Capex – rebounded sharply last year.

Corporate investment has rebounded far more quickly than normal…

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Source: UBS

Companies are investing to meet booming demand. They are also relocating production lines closer to home – or “reshoring.” This helps make supply chains more resilient and, with higher production costs in China, makes economic sense.

Technology – and in particular automation – can help companies protect margins and profits in a period of rising inflation and labour shortages.

As populations get older, especially in developed economies, greater productivity becomes an even more important driver of economic growth.

Before the pandemic, digital technology was already leading to improving productivity. The modernisation of ageing plant and equipment should help to extend the trend.

...which could lead to faster US productivity growth...

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Source: UBS

...especially as more businesses bring processes back onshore

Number of US companies announcing reshoring, by quarter

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Source: UBS

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

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This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.