Sign of Economic Growth: Businesses' Investing More in Equipment

Equipment investment is up from a year ago.

The economy continues to improve on a year-over-year basis, but shows slightly greater volatility on a monthly basis. The trend in the equipment financing sector - $628 billion market - is no different.

According to the Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index, overall new business volume for the equipment financing sector reached $5.1 billion in January - up 21 percent from the same period in 2011 but down 53 percent from December. However, the January-December decline is typical for the market.

Analysts look to the equipment financing sector for indication of how much business are investing in growth, as it often precedes gains in other areas such as hiring and spending.

"The continued strengthening in financing volume and trend toward healthier portfolios provide clear evidence that the equipment finance marketplace is in the midst of regaining some of the momentum lost during the Great Recession," explains ELFA president and CEO William Sutton.

Daniel McCabe, a senior vice president at John Deere Financial, added that recent gains in the construction sector are particularly promising, as they may lead to greater industry job creation.