Equipment Leasing and Finance Industry Confidence at Two-Year High

April 22nd, 2014 by DWM Magazine

The Equipment Leasing and Finance Foundation released the April 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 65.1, remaining at the highest index level in two years for the second consecutive month, unchanged from the March index.

When asked about the outlook for the future, MCI survey respondent Thomas Jaschik, president, BB&T Equipment Finance, said, “The first quarter of 2014 had positive results with respect to new business activity, and the economy is on a positive trajectory. The conclusion of the winter of 2013-2014 may be the catalyst for pent-up demand to begin to be released. This will have a positive impact on the equipment finance market throughout 2014.”

When asked to assess their business conditions over the next four months, 37 percent of executives responding said they believe business conditions will improve over the next four months, up from 31.4 percent in March. Sixty percent of respondents believe business conditions will remain the same over the next four months, down from 65.7 percent in March. Another 2.9 percent believe business conditions will worsen, unchanged from the previous month.

The number of survey respondents who believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months is up to 37 percent compared to 31.4 percent in March. Sixty percent believe demand will “remain the same” during the same four-month time period, down from 62.9 percent the previous month. Further, 2.9 percent believe demand will decline, down from 5.7 percent who believed so in March.

Executives who expect more access to capital to fund equipment acquisitions over the next four months came in at 28.6 percent, a decrease from 31.4 percent in March. Survey respondents who indicate they expect the “same” access to capital to fund business was 71.4 percent, up from 68.6 percent in March. No one expects “less” access to capital, unchanged from the previous month.
When asked, 37 percent of the executives reported they expect to hire more employees over the next four months, a decrease from 40 percent in March. Sixty percent expect no change in headcount over the next four months, unchanged from last month. Additionally, 2.9 percent expect fewer employees, up from no one who expected fewer employees in March.

Leadership that evaluates the current U.S. economy as “excellent,” was 2.9 percent, down from 5.7 percent last month. The majority, 91.4 percent, of the leadership evaluates the current U.S. economy as “fair,” up from 88.6 percent last month. Another 5.7 percent rate it as “poor,” unchanged from March.

More than one-third (34.3 percent) of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 31.4 percent who believed so in March. Slightly less than two-thirds (62.9 percent) of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 68.6 percent in March. The remaining 2.9 percent believes economic conditions in the U.S. will worsen over the next six months, an increase from no one who believed so last month.

In April, 40 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 45.7 percent in March. Sixty percent believe there will be “no change” in business development spending, an increase from 54.3 percent last month. No one believes there will be a decrease in spending, unchanged from last month.

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