Research and development spending at major companies declined last year for the first time in more than a decade, according to a survey by management consulting firm Booz & Co. But R&D as a percentage of revenues was up slightly from a year earlier because revenues dropped at a faster rate than R&D spending.The Jobs number came in hot today although the unemployment rate was flat. This should not be too surprising as ADP, TrimTabs, and Gallup all suggested a surge in October hiring as did recent ISM reports.
Booz makes an annual study of the 1,000 publicly traded companies globally that spend the most on R&D, based on their public disclosures. The consulting firm, which has studied data going back to 1997, said 2009 was the first year to show a decline in total R&D spending among these companies.
The cuts last year were concentrated in auto, computing, electronics and industrial companies, some of the biggest spenders.
"The world-wide recession finally caught up with the world's top innovation spenders in 2009," the Booz report says, adding that "the most forward-looking companies will likely move quickly to restore the R&D cuts they made in 2009."
Total 2009 R&D spending by the companies surveyed declined 3.5% from a year earlier to $503 billion. But that worked out to 3.8% of 2009 sales, up from 3.5% in 2008.
Apple last year spent about 3.1% of its sales on R&D, or about half the typical level for computer and electronic companies, said Barry Jaruzelski, a partner at Booz, and yet Apple's R&D appears to be far more effective than that of many rivals.
I will have more on jobs in just a bit.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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