Fully 32% of businesses plan to reduce their cash holdings in the coming quarter. This was shown in the forward-looking indicator, which increased 7 points from last quarter’s reading of -15 to -8. Only 24% of businesses signaled an intention to increase cash in the coming quarter, and their reasons for doing so are largely defensive.
This follows a trend that began over the past three months, which saw 28% reduce their holdings. Very few companies are deploying cash to grow their businesses; instead, they are doing so primarily due to a deterioration in business performance, and corresponding reductions in cash inflows. Slightly over one-fourth of companies who reported decreasing cash balances did so to reduce debt.