Graphic: Sticking with remote work? Businesses are betting on it
03/05/2021 18:39
By Ann Saphir
SAN FRANCISCO, May 3 (Reuters) - U.S. businesses have been
spending more on technology than on bricks and mortar for more
than a decade now, but the trend has accelerated during the
pandemic, one more sign that working from home is here to stay.
As spending on home-building has risen, spending on
nonresidential construction has dropped, with that on
commercial, manufacturing and office space slumping to under 15%
of total construction outlays in March, Commerce Department data
showed Monday.
Business spending on structures fell in the first quarter,
data from the Bureau of Economic Analysis showed last week. It
was the sixth straight quarterly decline, showcasing one of the
few weak spots in the economy as it regains steam amid a
receding pandemic.
Meanwhile, spending on technology rose, with investments in
software and information processing equipment contributing more
than 1 percentage point to the economy's overall 6.4% annualized
rise in economic output in the quarter, the BEA data showed.
Technology spending has added to growth in all but two of the
past 32 quarters, back to 2013. Spending on structures has
pulled GDP downward in 14 of those quarters.
The implications of the shift are broad: the economy
emerging from the depths of the pandemic will be more
technology-driven and less reliant on in-person transactions,
leaving jobs permanently changed and potentially fewer in
number.
Accelerated by the pandemic, the divergence between the two
types of business spending is here to stay, says Stanford
economics professor Nicholas Bloom.
"This is the surge in (work-from-home) which is leading
firms to spend heavily on connectivity," Bloom said.
He and colleagues have been surveying 5,000 U.S. residents
monthly, and found that from May to December about half of paid
work hours were done from home.
Workers' own spending to equip their home offices with
computer connectivity, desks and other necessities comes to the
equivalent of 0.7% of GDP, their surveys found, suggesting the
business investment data likely underestimates what's actually
being spent on technology.
Those sunk costs are one reason that on average Americans
will work one day a week from home even after the pandemic, up
from about one day a month before, Bloom says.
American firms' reliance on hybrid working should continue
to lift business spending on technology for the forseeable
future, said ING chief international economist James Knightley.
Spending on office buildings particularly will likely remain
weak at least until the end of the summer, he predicted, when
the return of most kids to school should allow more parents to
return to work.
Even then, he said, businesses will need to continue to
spend more than ever on connectivity and computers to support
the remote, or partially remote, workforce.
"I think there’s still a lot more to do there," he said.
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Don't build them and they won't come https://tmsnrt.rs/3xIKlu5
Businesses are putting their money where the work is https://tmsnrt.rs/32Xh293
What business investments are boosting GDP? https://tmsnrt.rs/3t4uDpt
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(Reporting by Ann Saphir, Howard Schneider, Dan Burns; Editing
by Chizu Nomiyama)
((Ann.Saphir@thomsonreuters.com; 415-677-2516;
www.twitter.com/annsaphir; Reuters Messaging:
ann.saphir.thomsonreuters.com@reuters.net))