US: the great unknown
It’s been a rollercoaster of a year for the US with much speculation from across the globe regarding the American market. The Global Asset and Auto Finance Survey 2016, research indicates continuing improvements in the US market resulting in leasing volumes which are now near record highs. Investment in equipment and software was expected to grow by 4.4 per cent last year, according to the 2016 Equipment Leasing and Finance US Economic Outlook report.
But there is a risk demand for equipment from the agriculture, mining and oilfield, railroad, industrial and materials handling equipment sectors could become more subdued. As the report states, this is because, “these markets are impacted by global economic issues, while continuing low oil prices will hit the energy equipment sector.”
The US Equipment Leasing and Finance Association’s figures predicted US$1.6 trillion was invested in plant, equipment and software in the country last year.
Around 64 per cent or $1.1 trillion of that amount was financed through equipment finance solutions. Interestingly, the data suggested small- and medium-sized businesses were substantial drivers of market growth.
Additionally, as the US economy continues to strengthen, and the jobs market picks up, so has the country’s appetite for buying cars, helping to drive demand for auto finance.
Overall, the report notes the US is on track to experience a period of “sustained growth and expansion in the economy – and this is good news for the equipment finance industry.”
As positive as this news is, businesses will need to bear in mind that the report also goes on to state that tighter regulations and tax increases are two factors that could hamstring market growth.