EY 2017 US Investment Monitor Shows Steady Number of Business Investment Projects

US business investment projects accounted for $142 billion in capital investment in 2016, according to the EY 2017 US Investment Monitor (USIM), an annual report prepared by Ernst & Young LLP’s Quantitative Economics and Statistics (QUEST) and Indirect Tax practices. Nearly 5,400 business investments were announced in 2016 and are expected to create or retain more than 358,000 jobs in the United States. Compared with last year, this is approximately the same number of project announcements but $23 billion lower in capital investments and 44,000 fewer jobs.

“These small, but numerous projects are important drivers of economic development in most states,” said Andrew Phillips, Principal of Ernst & Young LLP. “Companies research and analyze the relative merits of different locations before deciding where to invest, and many factors, including the availability of state and local tax incentives, contribute to investment decisions. Mobile capital investments serve as indicators of a region’s or state’s long-term economic growth potential and competitiveness.”

Data from the announced projects analyzed in the 2017 USIM points to longer-term trends shaping economic development both regionally and across industries. The USIM is a leading indicator showing where new investment spending and jobs can be expected over the next several years. The report focuses on US and foreign companies’ mobile capital investments, which are not tied to specific markets or geographies. Mobile capital investments include headquarters facilities, data and call centers, manufacturing facilities, distribution centers, and research facilities, which have a wide range of location options. Companies continue to pursue locations with high supply chain potential, low input costs, strong business incentives, growing industry clusters, and advantageous state and local tax systems.

The 20 largest job-creating projects accounted for more than 34,000 jobs across a wide range of industries and facility types and make up 10% of the total jobs announced in 2016. As in previous years, chemical manufacturing projects rank highly. New wholesale and retail trade, accommodation and food services and information investments were also significant drivers of new job announcements.

In 2016, 122 project announcements, or 2% of total projects, involved 500 or more jobs, of which only 34 projects – less than 1% of total projects — supported 1,000 or more jobs. Sixty-eight percent of projects announced fewer than 50 jobs created or retained, which is up 66% from 2015.

The 10 states that attracted the most new or retained jobs in 2016 project announcements account for 56% of all jobs included in this year’s USIM.

Ohio: 27,100
Texas: 23,700
Virginia: 21,900
Georgia: 21,000
Florida: 20,500
Illinois: 18,700
California: 17,800
North Carolina: 17,700
Tennessee: 16,600
Arizona: 16,300

The largest capital investment announcement in 2016 was a natural gas liquification facility. The next five largest project announcements were also related to petroleum manufacturing and liquefied natural gas. Automobile manufacturing, data centers, rubber, paper, chemicals, pharmaceutical and ethylene manufacturing investments were also among the largest announced in 2016.

States along the Gulf Coast continue to attract the greatest amounts of capital investment, with Texas and Louisiana claiming 40% of all announced investments.

Top 10 states by capital investment:

Louisiana: $31.2 billion
Texas: $25.4 billion
Pennsylvania: $10.2 billion
Michigan: $9.9 billion
Ohio: $6.1 billion
Tennessee: $5.7 billion
Virginia: $3.9 billion
Arizona: $3.6 billion
South Carolina: $3.3 billion
Georgia: $3.2 billion

Foreign investment spending announcements declined from 22% in 2015 to 8% in 2016. The downward trend is shared by countries worldwide, although the US remains the leading recipient of foreign direct investment. Foreign company investment contributed $12 billion to this year’s USIM, which is the lowest level since the 2007-2009 recession and is $24 billion lower than in 2015. China was the top investing nation, followed by Japan, the United Kingdom and Germany.

A copy of the study is available here: http://www.ey.com/Publication/vwLUAssets/EY-2017-US-investment-monitor/$FILE/EY-2017-US-investment-monitor.pdf