With US vaccination rates rising quickly and the end of the pandemic in sight, equipment and software investment growth is expected to be robust this year as businesses invest to adapt to a post-pandemic normal.
The Q2 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook
, released today by the Equipment Leasing & Finance Foundation, tips annual equipment and software investment growth of 11.2% for 2021. The report also predicts annual US GDP growth for 2021 of 5.7%.
Scott Thacker, Foundation chair and chief executive officer of Ivory Consulting Corporation, says: "Finally, we are beginning to see the light at the end of the tunnel. The widespread availability of vaccinations offers hope that economic activity will soon return to pre-pandemic levels, or beyond. The robust stimulus efforts, along with trillions of dollars in pent-up demand, point to a wave of spending this summer and fall.
"All indicators point to 2021 being a banner year for equipment and software investment, and the equipment finance industry is poised to benefit from that expected economic activity."
Highlights from the Q2 update to the 2021 Outlook include a 21% surge in equipment and software investment in Q4 2020, paving the way for growth of 11.2% in 2021.
The report finds that the US manufacturing sector continued to improve in early 2021 due to strong demand for both consumer and business goods. Underlying demand remains strong, although supply chain backlogs should be monitored and rising input prices could become an increasingly significant concern in the months ahead.
It warns that headwinds to keep an eye on include the potential for higher inflation, the ongoing labour market recovery and the emergence of new virus strains that could reduce the effectiveness of existing vaccines.
The report tracks 12 equipment and software investment verticals, and notes that nine of them are showing signs of accelerating investment after the pandemic-fuelled collapse, and three other verticals are showing signs of peaking, although investment growth should remain healthy in the near term.
Over the next three to six months, materials handling equipment investment growth should remain in positive territory, while agriculture machinery investment growth should remain robust and construction machinery investment growth could return to positive territory.