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Canada's Magazine for Financing & Leasing Executives

July 2 , 2014

Investment in equipment, software to grow

U.S. -- Investment in equipment and software is expected to grow 2.6 per cent in 2014, says the Q3 update to the ‘2014 Equipment Leasing & Finance U.S. Economic Outlook’ released by the Equipment Leasing & Finance Foundation (ELFF).

The foundation revised its 2014 equipment and software investment forecast to 2.6 per cent, down from 4.2 per cent growth forecast in its Q2 update to the ‘2014 Annual Outlook’ released in April. The foundation report, which is focused on the $827 billion equipment leasing and finance industry, forecasts 2014 equipment investment and capital spending in the United States and evaluates the effects of various related and external factors in play currently and into the foreseeable future.

William G. Sutton, CAE, president of the ELFF and president and CEO of the Equipment Leasing and Finance Association, says, “The foundation’s outlook report reflects a slowing in GDP and equipment investment growth due to a weak first quarter this year that resulted in part from the extremely cold winter. The rebound in Q2 is slower than anticipated, as recent data from the Equipment Leasing and Finance Association’s ‘Monthly Leasing and Finance Index’ and the foundation’s ‘Monthly Confidence Index’ reflect. We do, however, anticipate that equipment investment will rise in the second half of the year as economic conditions improve and business confidence continues to recover.”

Highlights from the study include:

  • The U.S. economy is expected to grow 1.5 per cent in 2014, revised from 2.8 per cent.
  • Equipment and software investment declined at an annualized rate of 1.8 per cent in Q1/14, following the 8.9 per cent surge in Q4/13.
  • Agriculture machinery investment will likely see slow growth, and potentially a contraction, through the rest of 2014, as both farm yields and commodity prices remain subdued.
  • Construction machinery investment will continue to experience strong growth, and the year-over-year growth figures will begin to trend positive as multiple quarters of expansion take hold amidst the housing recovery.
  • Materials handling equipment investment will experience stronger growth over the next 3 to 6 months.
  • All other industrial equipment investment will likely see moderate growth over the next 3 to 6 months as the “re-shoring” of manufacturing continues to be a dominant economic story in 2014.
  • Medical equipment investment will grow, but begin to level off near the end of the year.
  • Mining and oilfield machinery will experience improving growth through the middle of the year but will begin to level off at the end of the year.
  • Aircraft investment will likely experience about long-term average growth for the year.
  • Railroad equipment investment will improve from its recent contraction toward modest growth.
  • Investment in trucks will exhibit high-single digit growth over the next 3 to 6 months as economic activity improves and competitive diesel prices keep trucking transport competitive.
  • Software investment will be moderate in the next 3 to 6 months as companies continue to make investments in software and cloud technologies.




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