ELFF doubles forecast for 2014 equipment and software investment

According to the latest update from the Equipment Leasing & Finance Foundation (ELFF), the outlook for the asset finance industry is improving, and 2014 will now see investment in equipment and software grow by 5.5%, double the rate of earlier forecasts.

The revised Q4 prediction in ELFF’s 2014 US Economic Outlook survey is up from the 2.6% growth forecast in its Q3 update released in July. The ELFF says a stronger economy and continued replacement demand are behind the improvement and it expects to see equipment and software investment grow steadily over the next six months across most verticals.

William G. Sutton, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association (ELFA), said: “Industry confidence has remained consistently positive and capital spending is up. Although challenges remain—from geopolitical risks to global growth concerns—we remain optimistic regarding the outlook for the equipment finance sector through the end of 2014.”

The Foundation-Keybridge US Equipment & Software Investment Momentum Monitor, which tracks 12 equipment and software investment verticals, forecasts that agriculture machinery investment will see year-on-year contraction through the rest of 2014, as both farm yields and commodity prices remain modest.

Construction machinery investment is expected to experience moderate growth over the next two quarters, with materials handling equipment investment experiencing stronger growth over the period. All other industrial equipment investment will likely see continued solid growth over the next three to six months as the “re-shoring” of manufacturing continues to be a dominant economic story in 2014, according to the Monitor.

Medical equipment investment is expected to experience slowing growth near the end of the year, as will the mining and oilfield machinery sector and ships and boats investment after a rebound in Q2.

Aircraft investment will experience stronger growth towards the end of year, and railroad equipment investment is also predicted to accelerate, but investment in trucks is likely to be more modest. Computer investment will remain muted following strong replacement demand in recent quarters, but spending on software and cloud technologies will continue at a moderate pace.