Equipment Finance Confidence Improves in November

Overall confidence in the equipment finance market increased in November, demonstrating a steady industry outlook despite continuing concerns about the U.S. economy and the negative impact of federal government fiscal policies. The Equipment Leasing & Finance Foundation’s Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) was at 56.9 for the month, up from 54.0 in October.

The index is designed to be a qualitative assessment of both prevailing business conditions and expectations for the future as reported by key executives from the $827-billion equipment finance sector. A pool of 50 organization leaders is surveyed monthly, representing large-ticket, middle-market and small-ticket banks; independent; and captive equipment finance companies.

According to the November survey, 17.2 percent of executives responding said they believe business conditions will improve over the next four months, up from 11 percent in October, while 3.4 percent believe business conditions will worsen, down from 15 percent who believed so the previous month. Most respondents (79.3 percent) believe business conditions will remain the same, up from 74 percent in October.

Other survey results include:

• 13.8 percent of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.4 percent in October; 75.9 percent believe demand will remain the same, down from 77.8 percent, while 10.3 percent believe demand will decline, down from 15 percent who believed so in October.
   
• 24 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.5 percent in October, while 72.4 percent indicate they expect the same access to capital to fund business, down from 81.8 percent. None of the respondents in October expected less access to capital, but 3.4 percent of them did in November. 
   
• 27.6 percent of executives say they expect to hire more employees over the next four months, a decrease from 33.3 percent in October, while 65.5 percent expect no change in headcount, down slightly from 66.7 percent. When surveyed in October, none expected to hire fewer employees, but 6.9 percent did in November.
   
• None of the respondents rated the U.S. economy as “excellent” in October, but 6.9 percent evaluated it as such in November; 75.9 percent evaluated it as “fair” in November, down from 85.2, while 17.2 percent rated it as “poor,” up from 15 percent in October.
   
• While no one believed in October that U.S. economic conditions would improve over the following six months, 17.2 percent of the of survey respondents in November believe they will do so; 72.4 percent believe the U.S. economy will stay the same, down from 89 percent, while 10.3 percent believe it will worsen, relatively unchanged from October.
   
• In November, 34.5 percent of respondents indicate they believe their companies will increase spending on business development activities during the next six months, a slight increase from 33.3 percent in October; 65.5 percent believe there will be no change, also a slight increase from 66.7 percent, while no one believes there will be a decrease in spending, unchanged from October.

The full survey results are available on the foundation website at leasefoundation.org/IndRsrcs/MCI.