Materials handling investment rises as other sectors fall

Materials handling investment

Modest equipment and software investment growth is expected for the rest of 2016 after a dismal first two quarters.

According to the Q4 update to the 2016 Equipment Leasing & Finance U.S. Economic Outlook released by the Equipment Leasing & Finance Foundation, the US can expect modest equipment and software investment growth for the rest of 2016, as economic headwinds continue to weigh on investment spending and confidence.

Ralph Petta, president and CEO of the Equipment Leasing and Finance Foundation, says: "The softer growth numbers projected for 2016 reflect overall hesitancy on the part of business decision-makers to invest in equipment and software until the cloud that is the US election cycle clears in November. A potential wild card impacting 2017 investment growth is the Federal Reserve’s decision whether to increase short-term interest rates prior to year end."

Materials handling is one of the bright spots in the Economic Outlook, which is focused on the $1 trillion equipment leasing and finance industry.

The report predicts that materials handling equipment investment is likely to strengthen over the next three to six months.

All other industrial equipment investment growth is expected to rebound over the next three to six months, which should further boost the materials handling sector.

The report also suggests that US credit conditions will remain healthy overall, with little change from last quarter in the areas of consumer credit supply and financial stress, and only a slight decrease in commercial credit supply. Business demand for credit remains generally weak but has not deteriorated significantly from last quarter. Meanwhile, consumer credit demand continues to grow at a moderate pace, reflecting high consumer confidence.

Looking at the broader economy, the report notes "cross currents". Labour markets have been consistently strong this year, driving moderate gains in income, personal consumption expenditures, and housing. But at the same time, business investment and manufacturing activity continue to disappoint, and government spending has, thus far, experienced a sustained contraction.