Equipment Leasing & Finance Industry Confidence Higher in August

WASHINGTON — The Equipment Leasing & Finance Foundation (the Foundation) releases the August 2017 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 64.4 in August, up from 63.5 the previous 2 months.

When asked about the outlook for the future, MCI-EFI survey respondent Thomas Jaschik, president, BB&T Equipment Finance, said, “The political dysfunction in Washington continues to stifle the United States economy. Despite this lack of leadership the equipment finance industry has experienced solid growth in 2017. However, with some action on tax and regulatory reform the economy and equipment finance industry could greatly accelerate.”     

August 2017 Survey Results:
The overall MCI-EFI is 64.4, up from 63.5 the previous 2 months.

• When asked to assess their business conditions over the next four months, 38.2 percent of executives responding said they believe business conditions will improve over the next 4 months, an increase from 30.3 percent in July. 61.8 percent of respondents believe business conditions will remain the same over the next 4 months, a decrease from 69.7 percent in July. None believe business conditions will worsen, unchanged from the previous month.
• 38.2 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next 4 months, a decrease from 39.4 percent in July.  58.8 percent believe demand will “remain the same” during the same 4-month time period, up from 57.6 percent the previous month. 2.9 percent believe demand will decline, relatively unchanged from 3 percent who believed so in July.
• 17.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next 4 months, up from 15.2 percent in July. 82.4 percent of executives indicate they expect the “same” access to capital to fund business, down from 84.9 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 41.2 percent of the executives report they expect to hire more employees over the next 4 months, an increase from 33.3 percent in July. 55.9 percent expect no change in headcount over the next 4 months, a decrease from 66.7 percent last month. 2.9 percent expect to hire fewer employees, an increase from none in July.
• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. 100 percent of the leadership evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” both also unchanged from July.
• 23.5 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next 6 months, a decrease from 24.2 percent in July. 76.5 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next 6 months, an increase from 75.8 percent the previous month.  None believe economic conditions in the U.S. will worsen over the next 6 months, unchanged from last month.
• In August, 38.2 percent of respondents indicate they believe their company will increase spending on business development activities during the next 6 months, an increase from 36.6 percent in July. 58.8 percent believe there will be “no change” in business development spending, down from 63.6 percent the previous month. 2.9 percent believe there will be a decrease in spending, an increase from none last month.

August 2017 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket
“We are seeing continued steady demand with our customers mostly seeking to finance replacement equipment rather than for expansion plans. The ‘chaos’ in Washington gives no confidence to the small business owner who needs to gain a better sense of the future in order to invest in hiring and equipment.” Valerie Hayes Jester, President, Brandywine Capital Associates

Bank, Middle Ticket
“The economic and business positives far outweigh any negatives about the near-term future of the equipment finance industry.” Harry Kaplun, President, Specialty Finance, Frost Bank

Bank, Large Ticket
“The pricing environment remains very favorable for lessees. There are concerns about lack of progress in Washington surrounding tax policies.” Thomas Partridge, President, Fifth Third Equipment Finance

For more information, visit the Foundation.