Q4 Update to 2012 Economic Outlook Report Shows Decelerating Growth In Equipment and Software Investment
Washington, DC, October 4, 2012 –- The Equipment Leasing & Finance Foundation (the Foundation) releases a new quarterly update to its 2012 Equipment Leasing & Finance U.S. Economic Outlooktoday. 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.
Key findings include:
- The U.S. economy continues to grow at an anemic pace, evidenced by weaker-than-expected job creation in the past three months. Although growth in equipment and software investment slowed to an annualized rate of 4.8 percent in the second quarter from 5.4 percent in Q1, it continues to be a driver of growth in an otherwise subdued economy.
- Looking ahead to 2013, natural cyclical forces—particularly housing—should gain more traction and drive growth. However, some fiscal tightening is expected to counterbalance these positive trends. The revised projection for 2013 growth in equipment and software investment is 4.5 percent, down from the original forecast of 8 percent.
o Trends in equipment investment include:
o Agriculture equipment investment is likely to decline by 5-10 percent in the next three to six months.
o Computer and software equipment investment is projected to grow at a relatively slow pace of 1-3 percent.
o Construction equipment investment is projected to continue to grow at a strong pace (15 percent+) as the housing market rebounds.
o Industrial equipment investment should grow at a moderate clip of 5-9 percent in Q4.
o Medical equipment is likely to grow but at a slow pace of 1-2 percent.
o Growth in transportation equipment investment is likely to moderate, but should stay above 15 percent+ over the next 3 to 6 months.
o Credit market conditions remain in flux and highly reactive to Federal Reserve policy and the latest events in Europe. It is expected that tensions in global credit markets will ease somewhat, and U.S. interest rates should marginally increase in 2013 as the ‘flight to quality” trend slowly unwinds.
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 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 2013 Equipment Leasing & Finance U.S. Economic Outlook Annual Report is scheduled for publication in December 2012.
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research. Funded through charitable individual and corporate donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. Visit the Foundation online at http://www.LeaseFoundation.org.
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