Equipment Leasing & Finance Industry Confidence Eases in June

Washington, D.C. (June 20, 2019)—The Equipment Leasing & Finance Foundation (the Foundation) has released the June 2019 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. 

When asked about the outlook for the future, MCI-EFI survey respondent Quentin Cote, CLFP, president, Mintaka Financial LLC, said, “As unemployment is at record lows and employees are hard to come by, companies will rely more on capital equipment to support business growth and productivity growth from the employees they have. My concern is primarily the trade wars and their impact on the prices of goods. This will eventually weaken the purchasing power of consumers and small businesses.”

June 2019 Survey Results:
The overall MCI-EFI is 52.8, a decrease from 59.2 in May.   

•   When asked to assess their business conditions over the next 4 months, 3.3% of executives responding said they believe business conditions will improve, down from 16.1% in May; 80% of respondents believe business conditions will remain the same over the next f4 months, an increase from 67.7% the previous month; and 6.7% believe business conditions will worsen, an increase from 16.1% in May.

•   None of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next 4 months, a decrease from 16.1% in May; 83.3% believe demand will “remain the same” during the same 4-month time period, an increase from 77.4% the previous month; and 16.7% believe demand will decline, up from 6.5% who believed so in May.

•   13.3% of the respondents expect more access to capital to fund equipment acquisitions over the next 4 months, up from 12.9% in May; 86.7% of executives indicate they expect the “same” access to capital to fund business, a decrease from 87.1% last month; and none expect “less” access to capital, unchanged from last month.

•   When asked, 30% of the executives report they expect to hire more employees over the next 4months, a decrease from 41.9% in May; 63.3% expect no change in headcount over the next 4 months, an increase from 45.2% last month; and 6.7% expect to hire fewer employees, down from 12.9% last month.

•   40% of the leadership evaluate the current United States economy as “excellent,” down from 51.6% in May; 56.7% of the leadership evaluate the current U.S. economy as “fair,” an increase from 48.4% the previous month; and 3.3% evaluate it as “poor,” up from none in May.

•   3.3% of the survey respondents believe that U.S. economic conditions will get “better” over the next 6 months, down from 9.7% in May; 70% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next 6 months, a decrease from 77.4% the previous month; and 26.7% believe economic conditions in the U.S. will worsen over the next 6 months, an increase from 12.9% in May.

•   In June, 26.7% of respondents indicate they believe their company will increase spending on business development activities during the next 6 months, a decrease from 35.5% last month; 73.3% believe there will be “no change” in business development spending, an increase from 64.5% in May; and none believe there will be a decrease in spending, unchanged from last month.

June 2019 MCI-EFI Survey Comments from Industry Executive Leadership
Bank, Small Ticket
“We are optimistic about earning share of wallet in this very competitive environment, while we project that the economy will remain strong and capital investment will continue at solid levels. The polarized political climate will continue, and we believe will not have a material effect on the economy.” David Normandin, CLFP, president and chief executive officer, Wintrust Specialty Finance

Bank, Middle Ticket
“Lack of progress on trade tariffs is beginning to spook the market. Customers are only buying what they need to replace and are hesitant to expand.” Michael Romanowski, president, Farm Credit Leasing

“Increased economic tensions caused by an uncertain political climate are concerns.” Frank Campagna, business line manager, M&T Commercial Equipment Finance

For more information, visit leasefoundation.org.