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Moderate Industry Growth Expected Through Year's End
In its Q4 update to the 2013 Equipment Leasing & Finance U.S. Economic Outlook, the Equipment Leasing & Finance Foundation expects investment in equipment and software to grow 3.3% in 2013. The report, which is focused on the $725 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 report, the U.S. economy is largely in the same position it has been in for the past six months, with improving fundamentals weighed down by a number of headwinds resulting in subpar growth. Positive economic drivers noted in the report include a recovering housing market, inexpensive natural gas benefitting households and the industrial sector, solid auto sales, rising consumer confidence, improving credit availability for households and businesses and steady job gains. However, the report notes that a number of opposing forces, including fiscal consolidation, rising oil prices, and renewed fiscal policy tensions, continue to constrain growth.
The study showed that the U.S. economy is expected to generate positive overall growth of 1.7% in 2013. Equipment and software investment slowed from 3.1% annualized growth in Q1 2013 to just 1.0% (quarter-to-quarter annualized) in Q2. The slower growth is a reflection of broader macroeconomic difficulties and uncertainty, but also categorical revisions to the Bureau of Economic Analysis's equipment investment accounts.
Although an overall forecast of 3.3% growth in equipment and software investment for 2013 is expected, this increase is expected to be mixed. Trends include:
- Agriculture equipment investment is expected to remain weak on a quarter-to-quarter basis, but unusually poor performance in Q3 2012 could translate into positive annual growth in the second half of 2013.
- Computers & software investment is expected to grow at a slower pace than has been observed over the past several years. Annual growth should be in the 0% to 3% range during Q3 and Q4 of 2013.
- Construction equipment investment continued its rapid growth, up 38% year-over-year in the second quarter, as investment has continued to grow at what is likely an unsustainable rate. Leading indicators all decelerated recently, suggesting that a negative correction could occur within the next three to six months.
- Industrial equipment investment grew 1.4% year-over-year in Q2 and is expected to grow at a slightly faster rate in the second half of 2013.
- Medical equipment investment indicators look bleak, suggesting little to no growth going forward.
- Transportation equipment investment is expected to improve some and grow between 2% and 5% year-over-year moving forward.
The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast released in December provides a three-to-six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The Q4 report is the third update to the 2013 Annual Outlook. The 2014 Annual Outlook will be published in December. The full report can be accessed at http://bit.ly/17bdqy3.
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In its Q4 update to the 2013 Equipment Leasing & Finance U.S. Economic Outlook, the Equipment Leasing & Finance Foundation expects investment in equipment and software to grow 3.3% in 2013. The report, which is focused on the $725 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 report, the U.S. economy is largely in the same position it has been in for the past six months, with improving fundamentals weighed down by a number of headwinds resulting in subpar growth. Positive economic drivers noted in the report include a recovering housing market, inexpensive natural gas benefitting households and the industrial sector, solid auto sales, rising consumer confidence, improving credit availability for households and businesses and steady job gains. However, the report notes that a number of opposing forces, including fiscal consolidation, rising oil prices, and renewed fiscal policy tensions, continue to constrain growth.
The study showed that the U.S. economy is expected to generate positive overall growth of 1.7% in 2013. Equipment and software investment slowed from 3.1% annualized growth in Q1 2013 to just 1.0% (quarter-to-quarter annualized) in Q2. The slower growth is a reflection of broader macroeconomic difficulties and uncertainty, but also categorical revisions to the Bureau of Economic Analysis's equipment investment accounts.
Although an overall forecast of 3.3% growth in equipment and software investment for 2013 is expected, this increase is expected to be mixed. Trends include:
- Agriculture equipment investment is expected to remain weak on a quarter-to-quarter basis, but unusually poor performance in Q3 2012 could translate into positive annual growth in the second half of 2013.
- Computers & software investment is expected to grow at a slower pace than has been observed over the past several years. Annual growth should be in the 0% to 3% range during Q3 and Q4 of 2013.
- Construction equipment investment continued its rapid growth, up 38% year-over-year in the second quarter, as investment has continued to grow at what is likely an unsustainable rate. Leading indicators all decelerated recently, suggesting that a negative correction could occur within the next three to six months.
- Industrial equipment investment grew 1.4% year-over-year in Q2 and is expected to grow at a slightly faster rate in the second half of 2013.
- Medical equipment investment indicators look bleak, suggesting little to no growth going forward.
- Transportation equipment investment is expected to improve some and grow between 2% and 5% year-over-year moving forward.
The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast released in December provides a three-to-six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The Q4 report is the third update to the 2013 Annual Outlook. The 2014 Annual Outlook will be published in December. The full report can be accessed at http://bit.ly/17bdqy3.
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