Equipment leasing and finance industry confidence increases to six-month high

The Equipment Leasing & Finance Foundation, Washington, D.C., has released the October 2016 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 56.0, an increase from the September index of 53.8, and the highest level since April despite continued concerns about the November elections.

When asked to assess their business conditions over the next four months, 12.1 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 18.8 percent in September. In addition, 81.8 percent of respondents believe business conditions will remain the same over the next four months, an increase from 62.5 percent in September. Just 6.1 percent believe business conditions will worsen, a decrease from 18.8 percent the previous month.

Demand for leases and loans to fund capital expenditures is expected to increase over the next four months by 24.2 percent of survey respondents, a decrease from 28.1 percent in September. Another 57.6 percent believe demand will remain the same during the same four-month time period, up from 53.1 percent the previous month. Finally, 18.2 percent believe demand will decline, down slightly from 18.8 percent who believed so in September.

On the subject of access to capital to fund equipment acquisitions over the next four months, 18.2 percent of the respondents expect more access, an increase from none who expected more in September. For 75.8 percent of executives, access is expected to remain the same, a decrease from 96.9 percent the previous month. While only 6.1 percent expect less access to capital, that is an increase from 3.1 percent the previous month.

New employees will be hired over the next four months by 30.3 percent of the responding executives, an increase from 21.9 percent in September. Employee head count for the same period will remain the same for 60.6 percent of respondents, a decrease from 71.9 percent in the previous month. However, 9.1 percent expect to hire fewer employees, up from 6.3 percent in September.

None of the leadership evaluates the current U.S. economy as excellent, unchanged from September. Instead, 93.9 percent do evaluate the current U.S. economy as fair—a decrease from 100.0 percent in September—while 6.1 percent evaluate it as poor, an increase from none in September.

U.S. economic conditions will get better over the next six months according to 15.2 percent of the survey respondents, an increase from 6.3 percent in September. Another 69.7 percent of survey respondents indicate they believe the U.S. economy will stay the same over the next six months, a decrease from 75.0 percent the previous month. Finally, 15.2 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 18.8 percent who believed so in September.

In October, 36.4 percent of respondents said they believe their company will increase spending on business development activities during the next six months, a decrease from 40.6 percent in September. No changes in business development spending is expected by 63.6 percent, an increase from 53.1 percent the previous month. None believe there will be a decrease in spending, a decrease from 6.3 percent who believed so in September.