Morgan Stanley: Capital Expenditure Plans Dipped In December

Morgan Stanley's Composite Capex Plans Index has risen four consecutive months through November, reaching the highest level seen since June 2011. However, the Index cooled off from 22.3 in November to 21.3 in December.

“Last week, after the most recent data showed a slowdown in durable goods orders, we cut our tracking forecast for real equipment investment in Q4 to -4.3 percent from -0.2 percent and overall business investment to 0.4 percent from 2.3 percent,” Vincent Reinhart of Morgan Stanley wrote in a note.

Reinhart also notes that in addition to lower capital expenditure plans, a weakness in investment and business formations was also seen in December. Perhaps hurt the most, includes oil and gas extraction companies who will find it harder to fund “ambitious” spending plans in the coming year.

In terms of household spending, lower gasoline prices will help expand personal consumption spending at an average 3.25 percent pace in the current quarter and the first quarter 2015. The analyst states that 2015 is shaping up to be the strongest year for household spending since 2006.