Equipment leasing and finance industry confidence eases in October

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.

When asked about the outlook for the future, MCI-EFI survey respondent Harry Kaplun, president of specialty finance at 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.”

When asked to assess their business conditions over the next four months, 18.5 percent of executives responding said they believe business conditions will improve, an increase from 17.9 percent in September. More than 81 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.

Nearly 26 percent of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, a decrease from 35.7 percent in September. More than 70 percent believe demand will “remain the same” during the same four-month time period, an increase from 64.3 percent the previous month. Nearly 4 percent believe demand will decline, up from none who believed so in September.

Almost 15 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. Just over 85 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.

When asked, 44.4 percent of the executives report they expect to hire more employees over the next four months, a decrease from 50 percent in September. Another 48.2 percent expect no change in head count over the next four months, a decrease from 50 percent last month. Just over 7 expect to hire fewer employees, up from none last month.

Almost 52 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 unchanged from last month.

About 11 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from September. Just over 74 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. Almost 15 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 3.7 percent in September.

In October, 44.4 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 40.7 percent in September. About 56 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.