The Equipment Leasing and Finance Association, which represents the $1 trillion equipment finance sector, this week revealed its Top 10 Equipment Acquisition Trends for 2017, with predictions of economic improvement, renewed business confidence and business-friendly policy changes.
"Equipment leasing and fianncing provide the source of funding for a majority of U.S. businesses to aquire the productive assets they need to operate and grow," said Ralph Petta, ELFA president and CEO.
Here are the trends, in brief:
1. Look for capital spending to pick up in 2017 after the previous year’s negative equipment and software investment growth. After overall negative growth in 2016, equipment and software investment is on track to improve in 2017. Renewed enthusiasm by business owners to make capital investments will be driven by solid employment rates, rising incomes and higher business confidence.
2. Expect growth of financed equipment acquisitions to outpace growth in total equipment investment. Growth in equipment and software investment this year will be exceeded by growth in equipment financing as the propensity to finance has increased.
3. More business-friendly federal policy will bolster business investment and economic growth. Businesses will be further induced to make capital investments with promised action from the new Trump Administration and Congress for infrastructure spending, tax relief and reduced regulatory burdens and other constraints.
4. Changes in trade policy will risk headwinds for equipment exports. Businesses will also be following developments from the Trump Administration for a less-friendly trade environment.
5. The oil industry drag on the U.S. economy will cease. The oil price freefall that sent oilfield and mining investment plunging has steadied.
6. Many key equipment verticals will benefit from positive momentum. Changes in market and economic conditions will be good news for a number of previously underperforming equipment verticals this year.
7. Businesses will need to keep abreast of interest rate increases. A non-issue since the Great Recession, expect additional rate increases this year after the December 2016 hike.
8. Innovations in the equipment finance industry will increase flexibility and convenience for customers. End-users seeking value-added benefits for ease of access and process improvements will find them when financing equipment this year.
9. Lease accounting changes won’t deter financed equipment acquisitions. Changes approved by the Financial Accounting Standards Board (FASB) in 2016 to bring leases on-balance sheet weren’t as burdensome as many had anticipated, and the primary reasons to lease remain intact under the new rules. This year will see organizations preparing in earnest for the new standard to take effect beginning in 2019.
To learn more about lease accounting changes, check out our interactive graphic.
10. Businesses will watch for potential “wild cards” when considering equipment acquisition decisions. Despite many favorable factors for equipment spending this year, U.S. businesses will be keeping an eye on developments on numerous fronts.
Read the full trend report from ELFA here.