U.S. corporate treasurers, like the rest of the world, are in a wait-and-see mode and are not yet deploying their cash reserves.  In fact, they are continuing to build cash reserves for their organizations, according to the AFP Corporate Cash Indicators (AFP CCI), a quarterly study that measures recent and anticipated changes in U.S. corporate cash balances.  In this environment, companies continued to build cash and short-term investment balances during the third quarter of 2012.

Quarter-to-quarter, 40 percent of reporting organizations had greater cash balances at the end of 3Q12 than they had at the end of 2Q12.  Meanwhile, 26 percent had cut cash reserves.

The study, underwritten by State Street Global Advisors, was released today at the AFP Annual Conference in Miami.

Companies reported that their investment selection for cash and short-term investments had become neither more nor less aggressive.

Year-over-year, cash hoarding increased, with 40 percent holding greater balances at the end of 3Q12 than they had at the end of the 3Q11.

Looking forward, the build out of cash balances will slow slightly from current levels—33 percent of organizations expect to build cash and short-term investment balances over the next three months, while 21 percent plan to reduce these balances.

"This sidelined cash is withholding the fuel for economic growth," said Jim Kaitz , AFP's president and CEO. "This is the money that companies would use for new projects, expansion, R&D, and, ultimately, job creation.  Only when uncertainty dissipates, confidence in the economy improves, and companies release their cash will the job picture significantly improve."

AFP Corporate Cash Indicators
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+14    3Q12 v. 2Q12 

+16    3Q12 v. 3Q11 

+12    4Q12 expectations   

Represents "increase" percentage minus "decrease" percentage. See www.afponline.org/CCI

The AFP CCI provides treasury and finance professionals, policymakers and market analysts with timely data on a determinant of economic activity: corporate cash. The AFP CCI™ is created and maintained by the Association for Financial Professionals (AFP), a professional society that serves corporate finance departments globally.