Equipment finance industry maintains high confidence in October
The Equipment Leasing & Finance Foundation releases the October 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI); overall, confidence in the equipment finance market is 61.8, steady with the September index of 61.9, which was the highest level since January 2022.
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 Brent Hall, CLFP, senior vice president, Alliance Funding Group, said, “The future for the American economy actually looks bright compared to the international scene, and manufacturing will continue to re-shore with increasing need for capital spending.”
October 2024 Survey Results:
- The overall MCI-EFI is 61.8, steady with the September index of 61.9.
- When asked to assess their business conditions over the next four months, 37.9 percent of the executives responding said they believe business conditions will improve over the next four months, a decrease from 40 percent in September. 51.7 percent believe business conditions will remain the same over the next four months, relatively unchanged from 52 percent the previous month. 10.3 percent believe business conditions will worsen, up from 8 percent in September.
- Almost half (44.8 percent) of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 44 percent in September; 41.4 percent believe demand will remain the same during the same four-month time period, down from 52 percent the previous month. Only 13.8 percent believe demand will decline, an increase from 8.4 percent in September.
- Slightly more than a quarter (27.6 percent) of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 24 percent in September, while 72.4 percent of executives indicate they expect the same access to capital to fund business, down from 76 percent last month. None expect less access to capital, unchanged from the previous month.
- When asked, 24.1 percent of the executives report they expect to hire more employees over the next four months, an increase from 20 percent in September and 65.5 percent expect no change in headcount over the next four months, down from 68 percent last month. Only 10.3 percent expect to hire fewer employees, down from 12 percent in September.
- Just 6.9 percent of the leadership evaluate the current U.S. economy as excellent, up from none the previous month and 93.1 percent evaluate the economy as fair, down from 96 percent in September, while none evaluate it as poor, a decrease from 4 percent last month.
- A little more than a third (37.9 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, up from 24 percent in September while 51.7 percent indicate they believe the U.S. economy will stay the same over the next six months, down from 76 percent last month. Just 10.3 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from none the previous month.
- In October, 34.5 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 36 percent the previous month; 55.2 percent believe there will be no change in business development spending, slightly down from 56 percent in September. Just 10.3 percent believe there will be a decrease in spending, up from 8 percent last month.
October 2024 MCI-EFI Survey Comments from Industry Executive Leadership:
Bank, Small Ticket
“With the upcoming election close and the Fed starting the cycle of rate cuts, the uncertainty around these specific concerns will lessen. I think this will help business get back to work solving their customers’ problems and increase investment in capital equipment. Additionally, equipment finance companies, specifically within the bank segment, have unfrozen and are actively investing in the equipment finance sector providing needed access to capital at more attractive rates.” -- David Normandin, president and chief executive officer, Wintrust Specialty Finance
Bank, Large Ticket
“Lower interest rates will ignite capex for smaller companies that have been on the sidelines for a few years and need to add or replace equipment for growth. Getting past the election should provide some clarity on the economic direction of the U.S., thus more capex investments can be made. Lastly, onshoring will continue to promote infrastructure investment which requires capex spending to execute.” -- Jeffry Elliott, president, Huntington Equipment Finance
Captive, Small Ticket
“The Fed’s intent to lower interest rates combined with stabilizing of inflation will stimulate investment, spending and expansion.” -- Jim DeFrank, executive vice president and chief operating officer, Isuzu Finance of America, Inc.
Survey results are posted at https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link above.
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