Lower Q4 Outlook from Equipment Leasing & Financing Foundation
The Q4 update on equipment and software investment growth for 2015 dipped to 4.1%, according to the Equipment Leasing & Finance Foundation's (ELFF) U.S. Economic Outlook. The Foundation lowered its forecast from July's 5 percent growth projection, released in its Q3 Update.
The Economic Outlook, which is focused on the $903 billion equipment leasing and finance industry, forecasts 2015 equipment investment and capital spending in the United States and evaluates the effects of various industry and external factors likely to affect growth over the next 12 months.
William G. Sutton, CAE, President of the Foundation and President and CEO of the Equipment Leasing and Finance Association (ELFA), said, “The Foundation’s Outlook forecasts that equipment and software investment will pick up over the second half of 2015 after a slow start — although concerns about global economic weakness, renewed political uncertainty, and other potential headwinds are key trends to watch in the coming months. This outlook is consistent with data from the Foundation’s Monthly Confidence Index and ELFA’s Monthly Leasing and Finance Index, which both indicate solid industry performance. Capital spending is expected to outpace GDP growth again this year, and the investments made by U.S. businesses are increasingly reliant on financing solutions.”
Highlights from the study include:
- The U.S. economy is expected to grow 2.6 percent in 2015. GDP growth accelerated from 0.6 percent in Q1 2015 to 3.9 percent in Q2. The weak start to 2015 virtually assures that annual GDP growth will be below the long-term historical average of 3.0%.
- Growth in equipment and software investment slowed from 3.9 percent in Q1 2015 to 1.7 percent in Q2, driven by sharp contractions in energy and railroad investment. Overall, a modest pickup in investment is forecast for Q3 and Q4.
Looking at some specific sectors:
- Agriculture machinery investment growth will likely remain weak or negative over the next three to six months.
- Construction machinery investment growth should remain solid over the next three to six months.
- Materials handling equipment investment growth should slow over the next three to six months.
- Mining and oilfield machinery investment will remain weak over the next three to six months.
- Trucks investment growth could ease somewhat over the next three to six months.
The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research.
Download the full report at www.leasefoundation.org/research/eo/.
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