ELFA Press Release
Q4 Economic Outlook: Modest Growth Forecast for Equipment and Software Investment Through End of 2013
Washington, DC, October 8, 2013 – Investment in equipment and software is expected to grow 3.3% in 2013, according to the Q4 update to the 2013 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation. Equipment and software investment slowed in the second quarter, but the report predicts modest improvement in the second half of the year, depending on the outcome of the current fiscal policy debates. Growth is expected to be mixed, with some sectors outperforming others. 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.
· The U.S. economy is expected to generate positive but modest 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 headwinds and uncertainty, but also categorical revisions to the Bureau of Economic Analysis’s equipment investment accounts. Looking ahead, a modest uptick in investment is expected through the end of the year, with an overall forecast of 3.3% growth in equipment and software investment for 2013.
· Overall, the outlook for credit markets remains optimistic as investors continue to be risk-on, credit availability is steadily increasing, and the Federal Reserve is expected to maintain a near-zero short-term interest policy until economic conditions suggest otherwise.
· Growth in equipment and software investment is expected to be mixed. Leading indicators point towards a possible stabilization in investment in agriculture equipment. Fairly average growth is expected for investment in computers & software, construction, industrial, medical, and transportation equipment. Trends include:
o 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.
o 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.
o 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.
o 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.
o Medical equipment investment indicators look bleak, suggesting little to no growth going forward.
o Transportation equipment investment is expected to improve some and grow between 2% and 5% year-over-year moving forward
|Contact Name:||Amy Vogt|