This growth statistic, compiled by market data company Factset and based on a consensus of analysts' forecasts, is the lowest it has been in any of the past four years. It suggests that in spite of more buoyant economic growth, greater consumer confidence and better balance sheets, companies still do not feel inclined to spend.
If true, this is worrying for the sustainability of current valuations. Already managers such as Matt Hudson, manager of the Cazenove UK Equity Income fund, suggest that companies have prioritised dividend payouts at the expense of business growth. Managers agree that companies cannot sustain earnings growth on cost-cutting alone and, as some point, need to invest in their businesses to grow.
If earnings growth does not come through in 2014, valuations in aggregate look extremely high. The majority of share price growth in 2013 was driven by multiple expansion, while earnings fell over the course of the year.
That said, there are a number of factors that suggest the environment for corporate earnings may not be as bleak as this statistic suggests: Firstly, some businesses are spending. The survey highlights groups such as Microsoft and Ford as examples of companies increasing spending. Merger and acquisition activity appears to be picking up – Charter's $61bn bid for Time Warner Cable, for example, the Vodafone/Verizon split, Samsung's divestment of 'non-core' businesses. Those businesses that are dragging down the overall picture are oil groups such as Chevron, or flailing technology companies such as Intel.
Equally, the survey is based on analysts' forecasts. These proved spectacularly optimistic at the start of 2013 and ratcheted down progressively over the year. There is every chance that they have overshot on the downside as well and do not properly reflect corporate spending plans. After all, it is still a brave corporate manager that would admit he was going to play fast and loose with the company's balance sheet. The analysts' consensus has seldom been correct.
The survey only looks at US companies. Admittedly, it is unlikely that US corporate management has significantly different motivations to that in the UK or Europe, but US companies are perhaps uniquely short-term in their outlook. Also, US equity valuations are higher than elsewhere, which may be discouraging investment.
Market watchers would probably rather the statistics were painting a different picture: One where companies were increasingly committing to spending plans with the aim of growing their earnings. It cannot be considered good news, but the imminent set of earnings figures are likely to give a more realistic picture of the true state of corporate spending plans for 2014. Only after those should investors start to panic.