The recent stabilization of rig counts in the United States suggests that this source of restraint on business investment may be coming to an end. That said, business investment outside of the energy sector has been unusually soft for the past three quarters, and this weakness will bear close watching.
Perhaps investment is being held down as firms respond to the flat trajectories for manufacturing and exports, reflecting subdued foreign demand and the appreciation of the dollar since mid-2014. Another possibility could be that firms are reassessing the prospects for growth and profitability in an environment of weak productivity growth and are accordingly scaling back investment plans.