Equipment Leasing & Finance Industry Confidence Eases in October

Washington, D.C. (October 23, 2018)—The Equipment Leasing & Finance Foundation has released the October 2018 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 eased in October to 63.2, a decrease from the September index of 65.5.

Survey respondents are comprised of a wide cross-section of United States industry executives, including large-ticket, middle-market and small-ticket banks, independents, and captive equipment-finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

October 2018 Survey Results:

• 18.5 percent of responding executives said they believe business conditions will improve over the next four months, an increase from 17.9 percent in September; 81.5 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 82.1 percent the previous month; None believe business conditions will worsen, unchanged from the previous month.
   
• 25.9 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 35.7 percent in September; 70.4 percent believe demand will remain the same during the same four-month time period, an increase from 64.3 percent the previous month; 3.7 percent believe demand will decline, up from none who believed so in September.
   
• 14.8 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 10.7 percent in September; 85.2 percent of executives indicate they expect the same access to capital to fund business, a decrease from 89.3 percent last month; None expect “less” access to capital, unchanged from last month.
   
• 44.4 percent of the executives reported they expect to hire more employees over the next four months, a decrease from 50 percent in September; 48.2 percent expect no change in headcount over the next four months, a decrease from 50 percent last month; 7.4 percent expect to hire fewer employees, up from none last month.
   
• 51.9 percent of the leadership evaluate the current U.S. economy as “excellent”; 48.2 percent of the leadership evaluate the current U.S. economy as “fair”; and none evaluate it as “poor.” All of these statistics are unchanged from last month.
   
• 11.1 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, unchanged from September; 74.1 percent of survey respondents indicate they believe the U.S. economy will stay the same over the next six months, a decrease from 85.2 percent the previous month; 14.8 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 3.7 percent in September.
   
• 44.4 percent of respondents indicated they believe their company will increase spending on business development activities during the next six months, an increase from 40.7 percent in September; 55.6 percent believe there will be no change in business development spending, a decrease from 59.3 percent the previous month; None believe there will be a decrease in spending, unchanged from last month.

When asked about the outlook for the future, MCI-EFI survey respondent Harry Kaplun, president, Specialty Finance, Frost Bank, said, “Business optimism is apparent in all sectors, which leads to more capital spending. While there is some caution with large expansions, most companies are willing to spend on equipment to grow.”  For more information, visit leasefoundation.org.