US lessors anticipate a positive leasing
market in 2012 but predict some deceleration compared to the last
two years of strong growth.
According to the 2012 Equipment Leasing &
Finance US Economic Outlook published by the Equipment Leasing
& Finance Foundation (ELFF), investment in equipment and
software will grow by 9% in 2012.
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The software leasing market, which grew 10.5%
in 2011 and has experienced growth for eight consecutive quarters,
is set to see the strongest growth at between 8 and 10% during the
first half of 2012.
The predictions chime with the body’s Monthly
Confidence Index for December which shows confidence in the $628bn
(€479bn) equipment finance sector is steady, scoring 57.2, a
nominal decrease from the November index of 57.4, indicating
steadying optimism despite ongoing concerns about the global
economic situation.
The ELFF, an affiliate body of the Equipment
Leasing & Finance Association (ELFA), also predicts a strong
six months for the transport and construction sectors.
The report, produced in partnership with
economics and public policy consulting firm Keybridge Research,
provides a three-to-six-month outlook for industry investment,
credit market conditions, and key economic indicators and will be
updated quarterly throughout 2012.
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By GlobalDataThe report found:
- Agriculture equipment investment is
likely to decelerate slightly in the next 3-6 months. - Construction equipment investment is
likely to slow in the immediate near term, but could be buoyed by
the energy and housing sectors later in 2012. - Industrial equipment investment will
likely be hampered by macro-trends, which may cause some
deceleration in growth from what appears to be a recent peak in the
growth rate. - Medical equipment is on watch for a
leveling-off in investment spending. Investment growth rates,
while positive, have softened for six straight quarters and could
bottom out in late 2012. Still, near-normal growth is
anticipated in the next 3-6 months. - Transportation equipment investment
should remain solidly positive, but is unlikely to maintain the
rapid growth rates of 2011.
The report also pointed to persistently
high oil prices, household deleveraging, weakened consumer
confidence, and the eurozone financial crisis as contributions to
restrained growth in 2012.
However, the report concluded the macro
outlook for 2012 set the scene for a slow improvement, suggesting
impediments to growth were expected to gradually dissipate, with
more positive cyclical trends kicking in later in the
year.
Rick Remiker, president of Huntington
Equipment Finance and respondent to the ELFF confidence index,
said, “The equipment leasing and finance industry has held its own
over the past few quarters and favourably weathered several
macroeconomic challenges. 2012 may bring greater
opportunities as companies replace aged equipment and invest in
newer technology and expanded capacity.”
Three quarters of respondents to the MCI believe business
conditions will remain the same over the next four months and more
than 80% believe demand or leases and loans to fund capital
expenditures will also remain the same.
grant.collinson@vrlfinancialnews.com
