April ELFA confidence index released
The Equipment Leasing & Finance released the April 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market is 52.9, the second highest index in the last two years after last month’s index of 55.2.
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.
When asked about the outlook for the future, MCI-EFI survey respondent Mark Bonanno, president and COO, North Mill Equipment Finance, said, “Monetary policy has not been as effective in taming inflation that recently came in at an annual rate of 3.2 percent. The U.S. government as well as the consumer (via credit cards) have unsustainable debt levels, and that will eventually cause cracks in the economy.”
April 2024 survey results
The overall MCI-EFI is 52.9, a decrease from the March index of 55.2.
- When asked to assess their business conditions over the next four months, 10.7 percent of the executives responding said they believe business conditions will improve over the next four months, a decrease from 19.4 percent in March. 85.7 percent believe business conditions will remain the same over the next four months, up from 77.4 percent the previous month. 3.6 percent believe business conditions will worsen, relatively unchanged from 3.2 percent in March.
- Only 7.1 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.8 percent in March. Most (92.9 percent) believe demand will remain the same during the same four-month time period, up from 71 percent the previous month. None believe demand will decline, a decrease from 3.2 percent in March.
- Just 14.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.1 percent in March; 71.4 percent of executives indicate they expect the same access to capital to fund business, down from 74.2 percent last month and 14.3 percent expect less access to capital, up from 9.7 percent the previous month.
- When asked, 17.9 percent of the executives report they expect to hire more employees over the next four months, a decrease from 19.4 percent in March; 71.4 percent expect no change in headcount over the next four months, up from 67.7 percent last month and 10.7 percent expect to hire fewer employees, down from 12.9 percent in March.
- None of the leadership evaluate the current U.S. economy as excellent, unchanged from the previous month while 92.9 percent of the leadership evaluate the current U.S. economy as fair, down from 93.6 percent in March. Only 7.1 percent evaluate it as poor, up from 6.5 percent last month.
- A minority (17.9 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, down from 25.8 percent in March while 71.4 percent indicate they believe the U.S. economy will stay the same over the next six months, an increase from 54.8 percent last month. Only 10.7 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 19.4 percent the previous month.
- In April, 17.9 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.6 percent the previous month and 78.6 percent believe there will be no change in business development spending, up from 64.5 percent in March. Only 3.6 percent believe there will be a decrease in spending, down from 12.9 percent last month.
April 2024 survey comments from industry executive leadership:
Bank, Middle Ticket
“Our business is focused on agriculture and rural America. In many cases, ag producer profitability is down or expected to be down compared to the levels of recent years. This situation could make the cash flow and liquidity preservation benefits of a lease more attractive and valuable than they have been. The offset is that credit quality may be more of a challenge, but we expect it to remain quite manageable.” Says Jason Lueders, president, Farm Credit Leasing
Independent, Small Ticket
“The overspending by the Federal government is contributing greatly to driving up inflation,” says James D. Jenks, CEO, Global Finance and Leasing Services, LLC
Survey demographics
Segment Percent
Bank 46.4
Captive 14.3
Independent 39.3
Other 0
Market segments based on transaction size of new business volume
Large-Ttcket (New bus. vol. avg. transaction size more than $5 Million): 10.7 percent
Middle-ticket (New bus. vol. avg. transaction of $250,000 to $5 million): 42.8 percent
Small-ticket (New bus. vol. avg. transaction of $25,000 to $249,999): 46.4 percent
Micro-ticket (New bus. vol. avg. transaction less than $25,000): 0 percent
Organization size
Less than $50 million: 10.7 percent
$50 million – $250 million: 17.8 percent
$250 Million – $1 billion: 35.7 percent
More than $1 Billion: 35.7 percent
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