Quarter 2 Foundation Report Released

WASHINGTON, DC (April 13, 2014) – Investment in equipment and software is expected to grow 5 percent in 2015, according to the Q2 update to the 2015 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation. The Foundation lowered its 2015 equipment and software investment forecast to 5 percent, down from 6 percent growth forecast in its 2015 Annual Outlook released in December 2014.

The report predicts that an overall expansion in the economy will encourage both large and small businesses to increase capital spending this year, although at a slightly slower pace than in 2014. The Foundation’s report, 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.

“The equipment finance industry has seen positive growth so far in 2015, and recent data from the Foundation’s Monthly Confidence Index and the Association’s Monthly Leasing and Finance Index point to a healthy business sector. This positive trend is expected to continue throughout the year, driven by a strengthening economy and improved business confidence. Both supply and demand for credit are growing, and although the likelihood of a Fed rate increase later this year could lead to market volatility, it may also encourage businesses to pull forward planned investments in order to lock in current rates before they rise,” said William G. Sutton, CAE, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association.

Highlights from the study include:

• Overall, GDP is expected to grow 3.1 percent in 2015 as the economy finally hits its stride. Several headwinds — notably the strong U.S. dollar and harsh winter storms — could limit growth in 2015, yet growth is expected to exceed 3 percent for the first time since 2005. Growth drivers include a brighter jobs picture, greater access to credit, a rebound in consumer confidence and a housing market that could finally accelerate in 2015. Oil markets are a wild card, as sustained low prices could provide a significant boost to the economy despite hurting investment in certain equipment sectors.
• Equipment and software investment was subdued in the fourth quarter of 2014, slowing from 10.5 percent in Q3 to just 1.6 percent in Q4. Growth for all of 2014, however, was still a solid 5.8 percent, and even with a slightly slower expected pace of growth in 2015, the Outlook report forecasts businesses will be encouraged to increase their capital spending with the overall economic expansion.
• Lending to businesses has steadily increased, and businesses appear poised to increase their credit demand. For both large and small businesses, steady economic growth and reduced uncertainty may translate to increased confidence about the future — and, as a result, increased demand for credit.

For the full report, click here.