Management Accounting

Forecast: Growth in Equipment Leasing Slowing Down

After a third-quarter cooling, however, financing will heat up, an industry group predicts. StaffJuly 10, 2012

Projected growth in investment in equipment and software for 2012 has slowed to 6.4% entering the third quarter of the year, down from a second-quarter projection of 6.9%, according to an Equipment Leasing and Finance Foundation report released today.

Worries about “the European debt crisis, U.S. unemployment, and regulatory and political uncertainty continue to hamper growth,” says William G. Sutton, president of the foundation. “However, we are cautiously optimistic that growth will pick up in the second half of 2012 and into 2013 due to improvements in the manufacturing and housing sectors and lower oil prices.”

Credit-market conditions have settled down in the past few weeks after fears of Greece leaving the European Union brought tensions to a head, the foundation reported.

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The later flight to safety by investors pushed long-term U.S. Treasury rates to all-time lows. “As economic conditions slowly improve, demand for business loans will continue to grow, and supply constraints for large businesses should ease further,” the foundation said, noting, however, that “small businesses are reportedly having some difficulties in accessing capital.”

The foundation expressed bullishness about the competitive advantage its members, largely equipment-finance companies, enjoy. “Conditions remain favorable for purchasing versus leasing, as the cost of borrowing is near record lows,” it said in its release.