William G. Sutton, CAE, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association, said, “The Association's Monthly Leasing and Finance Index reports new business volume is up, the Foundation's Monthly Confidence Index shows industry confidence is solidly positive, and this Outlook for 2015 projects continued steady growth in equipment and software investment. Equipment investment has been relatively modest in recent years, but picked up in 2014 and now seems poised to maintain this momentum into 2015. Overall, these trends portend a positive result for the equipment finance industry and U.S. economy.”
Highlights from the study include :
- The U.S. economy is poised to have a breakout year in 2015, with growth expected to top 3 percent. Key “bright spots” that bode well for above-average growth include a rapidly improving labor market, increased access to credit, lower oil prices and fiscal healing. Meanwhile “wild cards” that could hinder growth include potential political gridlock, weakness in the global economy and geopolitical risks.
- The steadily improving economy will likely drive solid equipment and software investment growth in 2015. Continued improvement in the economy should gradually loosen credit constraints and increase credit demand as businesses and households gain more confidence in the economy.
- Equipment and software investment increased 9.3 percent in Q3 of 2014 after expanding 9.6 percent in Q2. Although these growth rates are unlikely to be sustained in the coming months, growth is still expected to be 5.9 percent in 2014 and remain relatively strong at 6.0 percent in 2015.
- The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is included in the report and tracks 12 equipment and software investment verticals, forecasts the following equipment investment activity:
- Agriculture machinery investment could see continued moderate declines over the next 3-6 months.
- Construction machinery investment should moderate over the next two quarters.
- Materials handling equipment investment growth may experience some moderation over the next 3-6 months.
- All other industrial equipment investment will likely remain strong over the next 3-6 months.
- Medical equipment investment growth is expected to be little changed over the next two quarters.
- Mining and oilfield machinery will likely slow or potentially experience negative growth in investment over the next 3-6 months, given recent declines in oil prices.
- Aircraft investment growth is expected to remain relatively stable over the next 3-6 months.
- Ships and boats investment will likely see little change in the next two quarters.
- Railroad equipment investment should moderate over the next 3-6 months.
- Trucks investment is expected to be little changed over the next 3-6 months.
- Computers investment will likely experience relatively stable investment over the next 3-6 months.
- Software investment will likely see a slight moderation in growth over the next 3-6 months.
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 3-6-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 2015.
Download the full report at www.leasefoundation.org/research/eo/.
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