Q4 2012 Economic Outlook Shows Decelerating Growth in Equipment and Software Investment

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Trends in equipment investment include:

  • Agriculture equipment investment is likely to decline by 5 to 10 percent in the next three to six months.
  • Computer and software equipment investment is projected to grow at a relatively slow pace of one to three percent.
  • Construction equipment investment is projected to continue to grow at a strong pace (15 percent+) as the housing market rebounds.
  • Industrial equipment investment should grow at a moderate clip of 5 to 9 percent in Q4.
  • Medical equipment is likely to grow but at a slow pace of 1 to 2 percent.
  • Growth in transportation equipment investment is likely to moderate, but should stay above 15 percent+ over the next three to six months.

The Equipment Leasing & Finance Foundation (the Foundation) recently released a new quarterly update to its 2012 Equipment Leasing & Finance U.S. Economic Outlook. The report, which is focused on the $628 billion equipment leasing and finance industry, forecasts 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. According to the Q4 outlook, projected growth in equipment and software investment for 2012 is 6.7 percent, down from the 2011 growth rate of 11.0 percent. Growth in equipment and software investment slowed to an annualized rate of 4.8 percent in Q2, down from 5.4 percent in Q1. The report finds that the recent slowdown in durable goods shipments indicates that equipment investment continued to lose momentum in Q3, but should remain positive — albeit at a decelerated pace compared to 2011 — through the rest of 2012.

William G. Sutton, CAE, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association (ELFA), said, “While growth in equipment and software investment is continuing, the pace of growth has decelerated. This finding aligns with the ELFA’s Monthly Leasing and Finance Index, which indicates that equipment finance activity is still growing, but at a slower rate than in 2011. Some sectors, including transportation and construction, continue to improve. However, economic and political uncertainty, especially in the area of tax and budget policy, continues to hamper business investment, as reported both in the Q4 outlook report and the Foundation’s Monthly Confidence Index.”

 

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