Investment in equipment and software is expected to grow 3.0% in 2017, according to the Annual 2017 Equipment Leasing & Finance U.S. Economic Outlook released by the Equipment Leasing & Finance Foundation. After a likely contraction in 2016, equipment and software investment is on track to improve in 2017. According to the Outlook, while persistent global headwinds and policy uncertainty are ongoing concerns, the U.S. economy’s fundamentals are generally solid, and rising business confidence should lead to increased investment. The Foundation’s report, which is focused on the $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate. The report will be updated quarterly throughout 2017.
Ralph Petta, President of the Foundation and President and CEO of the Equipment Leasing and Finance Association, said, “With the elections over and key policy decisions beginning to take shape, the cloud of uncertainty hanging over businesses’ decisions to invest appears to be lifting. Business confidence in the future of the U.S. economy is on the rise. Unemployment is slowly decreasing, housing prices are improving, and the securities markets are in all-time record territory. This more positive economic news during the second half of 2016 seems to indicate that GDP is poised for solid, if unspectacular, growth. We are hoping that the spillover effect is a strong equipment finance industry in 2017.”
Highlights from the study include:
• In 2017, the U.S. economy is poised to experience moderately strong growth of 2.7%. After a growth pause during the first half of 2016 in which low energy and commodity prices contributed to weak business confidence and investment, the U.S. economy appears to be back on solid footing.
• Credit market conditions are healthy and are not expected to inhibit business investment or the equipment finance industry.
• Struggles for the energy, manufacturing and export sectors posed a major drag on business investment in 2016, but early indicators point to growth of 3.0% in equipment and software investment in 2017.
• The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is included in the report, tracks 12 equipment and software investment verticals. A number of verticals are primed to improve in the first half of 2017. Over the next three to six months:
o Agriculture machinery investment growth will likely remain negative.
o Construction machinery investment growth should improve.
o Materials handling equipment investment growth should remain stable.
o All other industrial equipment investment growth will likely rebound.
o Medical equipment investment growth should remain stable.
o Mining and oilfield machinery investment growth is expected to improve.
o Aircraft investment growth will likely strengthen.
o Ships and boats investment growth is set to improve.
o Railroad equipment investment growth should continue to strengthen.
o Trucks investment growth is poised to accelerate.
o Computers investment growth is likely to improve.
o Software investment growth should continue to strengthen.
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 report will be updated quarterly throughout 2017.
Access the full report at www.leasefoundation.org/research/eo/.