Equipment Growth Hangs on Fiscal Cliff

Although U.S. equipment and software investments are expected to grow in 2013, they will be at a below-average rate of less than 3%, hampered by weak demand and fiscal uncertainty, according to the Equipment Leasing & Finance Foundation.

The outlook for investment in 2013 is largely contingent on the resolution of the "fiscal cliff," which could either continue to send negative shock waves through the economy or offer businesses encouragement, the foundation reports in its 2013 Equipment Leasing & Finance U.S. Economic Outlook.

Even once the fiscal challenges are resolved, it will take time to work out the details and for businesses to regain confidence, the foundation says. But growth in equipment and software investment is expected to begin to regain momentum in the third and fourth quarters of this year.

"The 2013 Equipment Leasing & Finance U.S. Economic Outlook projects positive but muted growth in equipment investment through the beginning of 2013, as policy uncertainty continues to weigh on business confidence," said William Sutton, president of the foundation and also president and CEO of the Equipment Leasing and Finance Assn. "However, if policymakers find a solution to key fiscal issues, we expect businesses will feel more confident in the second half of the year, leading to increased equipment investment."

Looking specifically at industrial equipment investment, growth is expected to continue, but at a slower rate than in recent quarters. Year-over-year growth in the sector slowed from just over 13% in the second quarter of 2012 to 4.5% in the third quarter. This was foreshadowed by weaker industrial production, stagnating capacity utilization, and only slight gains in manufacturing new orders, the report explains.

Opposing tensions are creating different short- and long-term dynamics in industrial equipment. In the near term, capacity overhang from the recession and heightened policy uncertainty are stunting investment. In the longer term, the "reshoring" of U.S. manufacturing will drive demand. Depending on the outcome of the fiscal cliff debate, manufacturing could drive stronger growth in the second half of 2013.

Domestic political risk is the major concern on the radar for 2013. The report calls for the U.S. economy to grow at a rate of 2.4% once major fiscal issues are resolved. Without a smooth solution to current fiscal challenges, growth is forecast to fall significantly below 2%.
Equipment and software investment took a significant hit in Q3 2012, declining 2.7% (annualized rate) after a 4.8% increase in the second quarter. The data suggest that businesses have essentially "hit the pause button" on investment until there is a resolution to the fiscal cliff.

More News:

  • IDS Is Among the First Vision Manufacturers to Introduce USB 3.0 Camera With Sony IMX174

    Equipped with image sensors, this new IDS camera model delivers outstanding imaging performance previously unattainable by CMOS-based cameras in terms of high sensitivity, high dynamic range, low fixed pattern noise, and highly accurate color reproduction.

  • China Adopts EtherCAT as a National Technology Standard

    Chinese company representatives shared experiences about their numerous EtherCAT systems and applications with the audience and explained the benefits realized through implementation.

  • HART-Fieldbus Foundation Marriage Complete

    The final step in constructing a single organization to lead process automation communications and integration technologies was completed at the end of August when the members of both the HART Communication Foundation and Fieldbus Foundation approved the merger proposed by their respective boards.

  • Use of BYOD Spreads, But Holdouts Remain

    Manufacturing workers are jumping on the bring-your-own-device (BYOD) bandwagon,

  • ISA100 Wireless Standard Gains Final IEC Approval

    ANSI/ISA-100.11a-2011, "Wireless Systems for Industrial Automation: Process Control and Related Applications," has been unanimously approved by the IEC as an international standard

  • Mergers, Acquisitions & Alliances: Danfoss Makes Offer, Hardinge Acquires Assets, and Fanuc and Rockwell Collaborate

    Danfoss made a public tender offer for all shares of the Finnish ac drives company Vacon. Hardinge, international provider of advanced metal-cutting solutions, agreed to acquire the assets of the Voumard internal diameter (ID) grinding business from Peter Wolters GmbH in Rendsburg, Germany. Maverick Technologies, acquired CQS Innovation, a system integrator specializing in control and information systems for life sciences, chemical and metals industries.

  • Belden Advocates Ethernet, Security and Wireless

    The Internet of Things (IoT) and the industrial IoT will use increasingly intelligent network infrastructures, but this will create more risk and increase the need to protect those critical infrastructures and their data. That's why we're investing both organically and through acquisition in Ethernet, security and wireless—so we can help transform this interconnected world.

  • The Future Is Forged at IMTS 2014

    Front and center was large-scale additive manufacturing in the form of the world's first 3D-printed car, which was printed and assembled on-site at the show. The project was a cooperative effort by Local Motors, Cincinnati Inc.; Oak Ridge National Laboratory; the University of Tennessee; and IMTS' Association for Manufacturing Technology (AMT).

  • Big Manufacturing Trade-Shows Dominate November Calendar

    There Will be More than 100 Exhibits Featuring Products and Services from Rockwell Automation and its Network of more than 100 Partners.

  • Honeywell OneWireless Takes the Prize for Best Wireless Solution

    The OneWireless Network is designed to enhance efficiency, safety and reliability in business processes. The OneWireless Network offers flexibility and scalability, wire-like performance with wireless security and best-in-class data availability with a low cost of ownership.

All news »

What are your comments?

Join the discussion today. Login Here.

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments