Equipment Leasing and Finance Industry Confidence Sharply Higher in August

Washington, DC (August 21, 2015) – The Equipment Leasing & Finance Foundation (the Foundation) recently released the August 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 67.4, rising sharply against the July index of 62.6.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president of Brandywine Capital Associates Inc., said, “Demand has stayed strong through the summer. The threat of potentially increasing interest rates and projects that have been delayed for too long have been principal motivators for our customers. I feel optimism is fueled by economic conditions improving and by consumer sentiment that seems to echo that positive attitude.”

August 2015 Survey Results:
The overall MCI-EFI is 67.4, higher than the July index of 62.6.

• When asked to assess their business conditions over the next four months, 36.4 percent of executives responding said they believe business conditions will improve over the next four months, an increase from 17.2 percent in July. 63.6 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 75.9 percent in July. None believe business conditions will worsen, a decrease from 6.9 percent who believed so the previous month.

• 40.9 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 20.7 percent in July. 59.1 percent believe demand will “remain the same” during the same four-month time period, down from 72.4 percent the previous month. None believe demand will decline, a decrease from 6.9 percent who believed so in July.

• 31.8 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 20.7 percent in July. 68.2 percent of survey respondents indicate they expect the “same” access to capital to fund business, down from 79.3 percent in July. None expect “less” access to capital, unchanged from the previous month.

• When asked, 36.4 percent of the executives report they expect to hire more employees over the next four months, a decrease from 51.7 percent in July. 63.6 percent expect no change in headcount over the next four months, up from 48.3 percent last month. None expect to hire fewer employees, unchanged from July.

• 4.5 percent of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 13.8 percent last month. 95.5 percent of the leadership evaluate the current U.S. economy as “fair,” up from 82.8 percent in July. None rate it as “poor,” a decrease from 3.5 percent the previous month.

• 27.3 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 24.1 percent who believed so in July. 68.2 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, relatively unchanged from 69 percent in July. 4.5 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 6.9 percent who believed so last month.

• In August, 54.5 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 48.3 percent in July. 45.5 percent believe there will be “no change” in business development spending, a decrease from 51.7 percent last month. None believe there will be a decrease in spending, unchanged from last month.

August 2015 MCI-EFI Survey Comments from Industry Executive Leadership:
Bank, Small Ticket
“Concerns still circle in Washington, D.C., on regulatory matters, as well as unrest around the world.” Kenneth Collins, CEO, Susquehanna Commercial Finance Inc.

Independent, Middle Ticket
“I have concerns about the impact on people’s confidence from China’s devaluation of its currency and the decreasing price of oil—both deflationary—and the overhang of the Fed possibly raising interest rates in the near term.” William H. Besgen, president and COO of Hitachi Capital America Corp.

Bank, Middle Ticket
“A rise in interest rates could force an uptick in economic activity. If so, the equipment finance industry could finish 2015 on a very strong note.” Thomas Jaschik, President, BB&T Equipment Finance

For more information, visit the Foundation.