Equipment and Software Investment Growth Forecast Upgraded to 4.2 Percent

April 3rd, 2014 by DWM Magazine

Investment in equipment and software is expected to grow 4.2 percent in 2014, according to the second-quarter update to the 2014 Equipment Leasing and Finance U.S. Economic Outlook released by the Equipment Leasing and Finance Foundation. The foundation increased its 2014 equipment and software investment forecast to 4.2 percent, up from 3.1 percent growth forecast in its 2014 Annual Outlook released in December 2013. The second-quarter report expects equipment and software investment to steadily grow over the next six months as economic conditions solidify and business confidence continues to recover.

According to the study, the U.S. economy is expected to grow 2.8 percent in 2014, the fastest pace since the 2008-09 recession. The severe weather this winter may have trimmed gross domestic product growth by a full percentage point, but it is expected that some of the loss will be made up in subsequent quarters.

Equipment and software investment grew at an annualized rate of 8.9 percent in the fourth quarter of 2013, following modest growth of 2.2 percent in the third quarter, the report shows. Additionally, credit supply continues to improve, and credit demand has rebounded for all business sizes.

Further, equipment and software investment is expected to steadily grow across most verticals, according to the Foundation-Keybridge U.S. Equipment and Software Investment Momentum Monitor, a newly expanded addition to the Outlook report. According to the Momentum Monitor, construction machinery investment will see stronger growth later in the year, but the year-over-year growth figures will appear weak due to a high base year effect. Materials handling equipment investment will experience slightly stronger growth over the next three to six months.

The study shows that all other industrial equipment investment will likely see moderate growth over the next 3 to 6 months as the manufacturing sector’s competitiveness improves. Investment in trucks will exhibit high-single digit growth over the next three to six months as economic activity improves and diesel prices remain competitive. Additionally, computers investment will be muted in the next three to six months after strong replacement demand over the past few quarters. Software investment will be moderate in the next three to six months as companies focus on upgrading to new technology.

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