U.S. businesses show no sign of deploying their cash any time soon, according to the latest Corporate Cash Indicators, a quarterly survey of corporate treasury and finance executives conducted by the Association for Financial Professionals.

AFP began collecting quarterly data in January 2011 and has now collected 24 data sets. See www.afponline.org/CCI for answers to frequently asked questions. The next set is slated to be published January 30, 2017. For any media queries, please contact Melissa Rawak at [email protected]. 

The quarter-over-quarter index surged 11 points to +19, while the year-over-year indicator added 7 points to +21, suggesting that organizations are extremely focused on building their cash reserves. However, the forward-looking indicator measuring expectations for increasing cash during the fourth quarter of 2016 decreased from a reading of +16 to +4, signaling that organizations are going to continue accumulating cash this fall, but at a slower pace than last quarter.

In the first three quarters of 2016, organizations indicated that they planned to accumulate cash during the respective quarter and they have done so, highlighting the cautious approach of organizations to deploying cash. The indicator for short-term investment aggressiveness shed 4 points to a reading of -5 in the third quarter, indicating companies were leaning towards a more conservative approach with their investments. The more conservative posture being adopted could be a result of the shift from prime money funds to Government funds.

Published each fiscal quarter by the Association for Financial Professionals, the AFP CCI measures changes in corporate cash holdings quarter-to-quarter and year-over-year, as well as the expected change in short-term investment and cash accumulation in the coming quarter.

"The October CCI shows that corporates are taking a wait-and-see approach when it comes to cash deployment, likely because of concerns over political uncertainty at home and abroad," said AFP President and CEO Jim Kaitz. "Absent a strategic priority, organizations are holding on to their cash."

October 2016 AFP Corporate Cash Indicators
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Change in cash and short-term investment holdings (over past quarter): 3Q16 v. 2Q16 = +19

Change in short-term holdings in the past year: 3Q16 v. 3Q15 = +21

Expected change in cash holdings during 4Q16 = +4

Aggressiveness of short-term investments = -5

The indicators measure recent and anticipated changes in corporate cash balances by calculating increase percentage minus decrease percentage.

Each quarter, AFP asks select senior corporate practitioners representing a broad cross section of U.S. businesses the same questions: whether their company's short-term holdings increased or decreased in the past year and past quarter; whether investment selections for those holdings changed; and whether they expect cash holdings to increase or decrease in the coming quarter. Participants manage their companies' cash and short-term investment portfolios and are fully aware of their companies' liquidity needs and business strategies. Since corporate decisions to grow/shrink the size of cash and short-term investment portfolios reflect their business outlook and direction, changes reported by this broad group of companies are indicators of economic activity.