Corporate Investment Is Beginning, Could Hiring Be Far Behind?
Like most rivers that start as a trickle before they become a stream, corporate cash has begun to flow into investment projects such as acquisitions, business launches and other capital expenditures. This should be seen as a positive sign for job seekers since some of this money is expected to go for new hiring.
That's according to a survey released today by the Association for Financial Professionals (AFP) which found about one in three (30%) finance pros are beginning to put cash to work in growth initiatives.
This is money that has been accumulating on the sidelines for the last six years.
The 2011 AFP Liquidity Survey (www.afponline.org/liquidity), underwritten by Citi, says the percentage of organizations currently reporting a decline in cash reserves is the largest in the survey's six year history. It noted that the main reason for a decline in cash was a decrease in operating cash flow stemming from the recession.
Still, the fact that 30% of reporting executives specifically indicated that that their organizations had begun to put cash to work in growth initiatives represents a small but noteworthy departure from AFP's previous liquidity surveys.
"While the survey shows very conservative behavior, we believe it provides hope for intermediate term prospects," said Jim Kaitz, AFP's president and CEO. "Some companies are beginning to spend cash to build their operations."
Looking ahead, executives remain cautiously optimistic. About 24% of net investor organizations and about 26% of net borrower organizations say they expect to further reduce cash reserves in the coming year. Of those, 42% expect to increase spending, 23% expect to pay back debt and 16% expect to acquire a business or launch a new operation.