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Equipment, leasing report: 'Sluggish' investment growth ahead


Railroad equipment investment growth is likely to remain negative over the next three to six months, the Equipment Leasing and Finance Foundation announced Monday.

In the third-quarter update to its 2016 U.S. Economic Outlook report, the foundation forecast that investment in equipment and software across the entire equipment leasing and finance industry would grow a "sluggish" 0.9 percent in 2016. The latest forecast is down from the 2.7 percent growth that tje foundation announced in the Outlook report's second-quarter update released in April.

This year's 0.9 growth would reflect a significant slowdown from last year's 3.8 percent growth, foundation officials said in a press release.

The slow growth in business investment is due to a combination of slow growth in the global economy, a contraction in trade, heightened political uncertainty and low commodity prices, they said.

The report, which is focused on the $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate.

Equipment and software investment contracted significantly in first-quarter 2016, and although investment should rebound somewhat in the months ahead, the poor first quarter performance will limit overall investment growth for the year, according to the report.
Supported by generally healthy domestic fundamentals, the U.S. economy is forecast to expand 2.2 percent in 2016, slightly slower than the pace of growth over the past two years, the foundation reported.

Headwinds — including uncertainties posed by the results of the Brexit referendum in Britain, declining global trade and a persistently strong dollar — are expected to continue to hurt U.S. market confidence and slow economic growth, the report stated.

Contact Progressive Railroading editorial staff.

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