According to the Equipment Leasing and Finance Foundation, purchases of business equipment have increased from 2.6 to 5.5 percent this year. This movement boosts economic and employment growth because businesses that buy factory equipment, computers, and software often hire more workers to operate them. USA Today has the full story below.
Company purchases of airplanes and other long-lasting goods have trended up recently. (Paul Richards, AFP/Getty Images)
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The economic slowdown in Europe and the rising dollar have raised concerns about slowing exports and subdued corporate earnings. But here’s a trend that could help offset the fallout: U.S. companies are buying lots of stuff from each other.
The Equipment Leasing and Finance Foundation recently revised up its forecast for business equipment and software investment this year to 5.5% from 2.6%. That’s key to economic and employment growth because businesses that buy factory equipment, computers and software often hire more workers to operate it. And companies that sell the products frequently bring on employees to meet the surging demand.
And all of the economic activity should help bolster stocks.
“Industry confidence has remained consistently positive and capital spending is up,” says foundation president William Sutton.
After contracting in the weather marred first quarter, equipment and software spending grew 9.6% of second-quarter, the foundation says. It expects continued growth in the third quarter and a “modest” pickup for the coming year.
Among the group’s findings:
– Investment in materials handling and industrial equipment is expected to grow solidly over the next six months, in part because more manufacturers are moving production back to the U.S. from overseas.
– Spending on construction machinery is expected to grow moderately as the housing and commercial real estate markets recover.
– Software investment is likely to see moderate growth as companies continue to build out cloud technologies.
–But spending on farm machinery, is likely to contract and outlays for computers and mining and oil drilling machinery should grow more slowly.
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