Equipment Leasing & Finance Industry Confidence At All-Time High in January

WASHINGTON (January 18, 2018) – The Equipment Leasing & Finance Foundation (the Foundation) releases the January 2018 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. 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 75.3 in January, an increase from 69.4 in December, and the highest level since the index was launched in 2009.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, said, “Activity has picked up since the midpoint of the fourth quarter and 2017 closed on a very positive note. The year is off to a great start even with some of the weather issues plaguing the country. I’m hoping the new tax laws will keep this optimism in full gear.”

January 2018 Survey Results:
The overall MCI-EFI is 75.3 in January, up from 69.4 in December.

• When asked to assess their business conditions over the next four months, 67.7 percent of executives responding said they believe business conditions will improve over the next four months, an increase from 32.1 percent in December. 29.0 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 67.9 percent the previous month. 3.2 percent believe business conditions will worsen, up from none who believed so the previous month.
• 67.7 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 46.4 percent in December. 29.0 percent believe demand will “remain the same” during the same 4-month time period, down from 53.6 percent the previous month. 3.2 percent believe demand will decline, an increase from none who believed so in December.
• 35.5 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 25.0 percent in December. 61.3 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 67.9 percent last month. 3.2 percent expect “less” access to capital, down from 7.1 percent last month.
• When asked, 41.9 percent of the executives report they expect to hire more employees over the next four months, a decrease from 53.6 percent in December. 54.8 percent expect no change in headcount over the next 4 months, an increase from 46.4 percent last month. 3.2 percent expect to hire fewer employees, an increase from none in December.
• 25.8 percent of the leadership evaluate the current U.S. economy as “excellent,” up from 10.7 percent last month. 74.2 percent of the leadership evaluate the current U.S. economy as “fair,” a decrease from 89.3 percent in December. None evaluate it as “poor,” unchanged from last month.
• 61.3 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next 6 months, an increase from 42.9 percent in December. 38.7 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next 6 months, a decrease from 57.1 percent the previous month. None believe economic conditions in the U.S. will worsen over the next 6 months, unchanged from December.
• In January, 61.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next 6 months, an increase from 57.1 percent in December. 35.5 percent believe there will be “no change” in business development spending, a decrease from 42.9 percent the previous month. 3.2 percent believe there will be a decrease in spending, an increase from none last month.

January 2018 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket
“With the tax bill now being law, this erases some uncertainty and improves business incentives. 2018 could be an excellent year for business investment.” David T. Schaefer, CEO, Mintaka Financial, LLC

Bank, Small Ticket
“I believe that the tax reform legislation will provide a short-term boost to capex spending. However, I am less optimistic that tax reform will be a long-term positive for our economy.” Paul Menzel, President and CEO, Financial Pacific Leasing, Inc., an Umpqua Bank Company

Bank, Middle Ticket
“The improved tax climate, low interest rates, almost full employment and increasing corporate profitability all support higher levels of equipment acquisition.” Harry Kaplun, President, Specialty Finance, Frost Bank

Independent, Large Ticket
“The passing of tax reform as well as the continued easing of the burdensome regulatory environment have created additional optimism in the business communities that we serve.” Dave B. Fate, President and CEO, Stonebriar Commercial Finance

For more information, visit the Leasing Foundation.