Equipment Leasing & Finance Industry Confidence Levels Near All-Time High in February

WASHINGTON (February 16, 2017) – The Equipment Leasing & Finance Foundation (the Foundation) recently released the February 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 72.2, leveling off after January’s all-time high index of 73.4.

When asked about the outlook for the future, MCI-EFI survey respondent Thomas Partridge, president, Fifth Third Equipment Finance, said, “With the commitment of the Trump Administration to reduce regulation we expect more companies to start thinking more about expansion and the growth of their business versus a focus on regulatory compliance. Longer term concerns are over the direction of tax policies and their impact on the equipment finance industry. Any movement toward expensing capital expenditures could impact our industry. We think this is more of a 2018 issue than a 2017 issue.”   

February 2017 Survey Results:
The overall MCI-EFI is 72.2, a decrease from the January index of 73.4.

• When asked to assess their business conditions over the next four months, 69.2 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 74.2 percent in January. 26.9 percent of respondents believe business conditions will remain the same over the next four months, an increase from 22.6 percent in January. 3.8 percent believe business conditions will worsen, an increase from 3.2 percent the previous month.

• 53.8 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 71.0 percent in January.  42.3 percent believe demand will “remain the same” during the same four-month time period, up from 25.8 percent the previous month.  3.8 percent believe demand will decline, up from 3.2 percent who believed so in January.

• 15.4 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 19.4 percent who expected more in January.  84.6 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 80.6 percent the previous month. None expect “less” access to capital, unchanged from last month.

• When asked, 42.3 percent of the executives report they expect to hire more employees over the next four months, an increase from 35.5 percent in January. 50.0 percent expect no change in headcount over the next four months, a decrease from 61.3 percent last month. 7.7 percent expect to hire fewer employees, up from 3.2 percent in January.

• None of the leadership evaluate the current United States economy as “excellent,” unchanged from last month. 100.0 percent of the leadership evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” both also unchanged from January.

• 73.1 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 61.3 percent in January. 26.9 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 38.7 percent the previous month. None believe economic conditions in the U.S. will worsen over the next six months, unchanged from last month.

• In February, 65.4 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 58.1 percent in January. 34.6 percent believe there will be “no change” in business development spending, a decrease from 41.9 percent the previous month. None believe there will be a decrease in spending, unchanged from last month.

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

Independent, Small Ticket
“We start the year with cautious optimism. Transaction flow is consistent; projects that had been placed on hold by our customers seem to be moving forward. I am concerned that the political environment is still distractive and the flurry of activity in Washington since the inauguration is not providing the level of comfort we had hoped for from the current Administration. Portfolios continue to perform well. Yields are still under tremendous pressure. 2017 will continue the trend of favorable credit windows and rates for customers looking to finance equipment.” Valerie Hayes Jester, President, Brandywine Capital Associates

Bank, Middle Ticket
“We continue to support our customers as they traverse through a low dollar commodity cycle.  There have been some improvement on input costs, but challenges continue resulting in lower capex for many of our customers.” Michael Romanowski, President, Farm Credit Leasing Services Corporation

Bank, Middle Ticket
“For the first time in a decade we are seeing a pro-business environment. Overall, the political atmosphere, economic conditions and world matters are improving.”  Harry Kaplun, President, Specialty Finance, Frost Bank

For more information, visit the Foundation.