Equipment Leasing and Finance Industry Confidence Eases in September

WASHINGTON, D.C. (September 21, 2015) – The Equipment Leasing & Finance Foundation (the Foundation) has released the September 2015 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 $903 billion equipment finance sector. Overall, confidence in the equipment finance market is 61.1, easing from the sharp rise in the August index of 67.4.

When asked about the outlook for the future, MCI-EFI survey respondent Thomas Jaschik, president, BB&T Equipment Finance, said, “An increase in interest rates may help to spur activity in the equipment finance sector. Rising costs are always an impetus for taking action now vs. later. Rising interest rates could be the catalyst to push companies to act now with respect to capital equipment acquisitions. This could create tremendous opportunities within the equipment finance market.”

September 2015 Survey Results:
The overall MCI-EFI is 61.1, easing from the August index of 67.4.

• When asked to assess their business conditions over the next four months, 22.2 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 36.4 percent in August. 70.4 percent of respondents believe business conditions will remain the same over the next four months, an increase from 63.6 percent in August. 7. percent believe business conditions will worsen, an increase from none who believed so the previous month.
• 29.6 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 40.9 percent in August. 59.3 percent believe demand will “remain the same” during the same four-month time period, unchanged from the previous month. 11.1 percent believe demand will decline, an increase from none who believed so in August.
• 25.9 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 31.8 percent in August. 70.4 percent of survey respondents indicate they expect the “same” access to capital to fund business, up from 68.2 percent in August. 3.7 percent expect “less” access to capital, up from none the previous month.
• When asked, 37.0 percent of the executives report they expect to hire more employees over the next four months, a slight increase from 36.4 percent in August. 59.3 percent expect no change in headcount over the next four months, down from 63.6 percent last month. 3.7 percent expect to hire fewer employees, up from none in August.
• None of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 4.5 percent last month. 96.3 percent of the leadership evaluate the current U.S. economy as “fair,” up from 95.5 percent in August. 3.7 percent rate it as “poor,” an increase from none the previous month.
• 18.5 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 27.3 percent who believed so in August. 74.1 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, up from 68.2 percent in August. 7.4 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 4.5 percent who believed so last month.
• In September, 51.9 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 54.5 percent in August. 44.4 percent believe there will be “no change” in business development spending, a decrease from 45.5 percent last month. 3.7 percent believe there will be a decrease in spending, an increase from none last month.

September 2015 MCI-EFI Survey Comments from Industry Executive Leadership:

• Independent, Small Ticket

“We are still bullish as we head into the fourth quarter. Demand continues to be strong and in spite of the recent fluctuations of the stock market, our customers are continuing with business expansion projects and replacement of equipment.” Valerie Hayes Jester, president, Brandywine Capital Associates Inc.

• Bank, Middle Ticket

“Replacement equipment financing and equipment debt consolidation continue, but expansionary plans are becoming less robust. The full effect of international economic problems are the largest inhibitor to growth in the U.S.” Harry Kaplun, president, specialty finance, Frost Bank

• Bank, Middle Ticket

“[I am] concerned about the energy sector and the decline in energy capex. About 20 percent of our business is centered in energy, and the decline in oil prices has put several projects on hold.” Elaine Temple, president, BancorpSouth Equipment Finance