Equipment Leasing & Finance Industry Confidence Eases Again in October

Washington, D.C. (Oct. 17, 2019)—The Equipment Leasing & Finance Foundation has released the October 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. Overall, confidence in the equipment finance market is 51.4, a decrease from the September index of 54.7.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates Inc., said, “We still see continued demand for certain classes of replacement equipment. Our customers who have any cross-border interests seem to be postponing acquisitions due to uncertainty with trade issues and tariffs. The recent events in Washington could provide some headwinds to a strong fourth quarter.”

October 2019 Survey Results:
The overall MCI-EFI is 51.4, a decrease from 54.7 in September.   

•   When asked to assess their business conditions over the next 4 months, 9.7% of executives responding said they believe business conditions will improve over the next 4 months, down from 10.3% in September; 71% of respondents believe business conditions will remain the same over the next 4 months, a decrease from 75.9% the previous month; 19.4% believe business conditions will worsen, up from 13.8% in September.

•   13.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next 4 months, unchanged from September; 73.3% believe demand will “remain the same” during the same 4-month time period, a decrease from 76.7% the previous month; 13.3% believe demand will decline, up from 10% in September.

•   16.7% of the respondents expect more access to capital to fund equipment acquisitions over the next 4 months, unchanged from September; 80% of executives indicate they expect the “same” access to capital to fund business, a decrease from 83.3% last month; 3.3% expect “less” access to capital, an increase from none in September.  

•   When asked, 16.1% of the executives report they expect to hire more employees over the next 4 months, a decrease from 30% in September; 71% expect no change in headcount over the next 4 months, an increase from 63.3% last month; 12.9% expect to hire fewer employees, up from 6.7% the previous month.

•   19.4% of the leadership evaluate the current United States economy as “excellent,” and 80.7% of the leadership evaluate the current U.S. economy as “fair,” both relatively unchanged from the previous month. None evaluate it as “poor,” unchanged from last month.

•   3.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next 6 months, unchanged from September; 58.1% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next 6 months, a decrease from 70% the previous month; 38.7% believe economic conditions in the U.S. will worsen over the next 6 months, an increase from 26.7% in September.

•   In October, 25.8% of respondents indicate they believe their company will increase spending on business development activities during the next 6 months, a decrease from 26.7% last month; 71% believe there will be “no change” in business development spending, an increase from 70% in September; 3.2% believe there will be a decrease in spending, unchanged from last month.

October 2019 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Application volume remains strong with consistent approval rates. Portfolio performance remains strong, and we are focused here given an uptick of delinquency by peers.” David Normandin, CLFP, president and chief executive officer, Wintrust Specialty Finance

Independent, Small Ticket
“I’m optimistic that the consumer remains healthy, with low unemployment and relatively low personal debt. I’m concerned that the trade wars are starting to have effect on the economy, starting with transportation.” Quentin Cote, CLFP, president, Mintaka Financial LLC

Bank, Middle Ticket
“We continue to see challenges in the agriculture industry. Until trade issues are resolved, we do not expect a robust capital investment environment.” Michael Romanowski, president, Farm Credit Leasing  

For more information, visit .leasefoundation.org.