The eurozone crisis, combined with high oil
prices, has lead to a drop in confidence in US leasing for the
second quarter of the year although growth is still expected.
The second instalment of the Equipment Leasing
and Finance Foundation (ELFF) 2012 Economic Outlook revealed
projected growth in equipment and software investment of 7%, down
from the 9% predicted in December.
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The report by ELFF, the research arm of the
Equipment Leasing and Finance Association (ELFA), identified high
oil prices, uncertainty surrounding the eurozone debt crisis, and a
slowdown in China and other emerging markets as three impediments
to wider economic growth which have dragged down expectations.
A particularly strong 2011 has also
contributed to the expected comparative contraction in 2012,
according to the report.
“Equipment investment continued to grow at a
strong pace, and ended the year up 10.4% from 2010. The latest data
suggests that the expiration of tax credits for bonus depreciation
and expense allowances drew forward some capital spending into the
fourth quarter that may have otherwise taken place in 2012.
“As a result, while we expect healthy
year-year growth in equipment investment to continue, the
annualized growth rate from Q4 2011 to Q1 2012 may look
surprisingly weak,” the report said.
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By GlobalDataThe report predicted the most significant
growth, while still revised down, will continue to be in the
construction and transport sectors.
Investment in the software and computer
equipment sector, which averaged
11% in 2011, has been contracted to between 5%
and 10%, slightly lower than forecasted in December.
William Sutton, president of both ELFF and
ELFA, said, the while the recent
monthly business and confidence indexes showed an increase in
growth confidence, the steady but slower growth rate reported in
this latest research reflected the impact external factors have on
equipment investment over a broader stretch of time.
“We remain cautiously optimistic,” he
added.
Looking further ahead to the second of the
year, the report speculated, notwithstanding an external shock, the
US is poised for faster growth driven by pent-up demand in the
consumer and business sectors.
The report, which will be updated quarterly
throughout the year, forecast real GDP growth of 2.3%, down from
2.4% in December and inflation is forecast to average 2.4% for the
year.
