Equipment finance industry confidence up again in September
No executives surveyed expect U.S. economic conditions to worsen over next six months.
The Equipment Leasing & Finance Foundation released the September 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) September 18.
Overall, confidence in the equipment finance market is 61.9, an increase from the August index of 58.4, and 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.
“Many firms, particularly small- and medium-sized businesses, have been delaying equipment purchases, citing continued high interest rates and uncertainty about the economy amplified by the upcoming election. This ‘let’s wait and see what happens’ mindset has contributed to diminished demand for equipment financing. Assuming the Federal Reserve lowers rates this fall, and once the election is behind us, I think we will begin to see an increase in business volumes. Barring any prolonged adverse reaction from the financial markets to the election outcome, I anticipate a more robust December and first quarter 2025 for our industry,” says Nancy Pistorio, president, Madison Capital.
September 2024 survey results
The overall MCI-EFI is 61.9, an increase from the August index of 58.4.
- When asked to assess their business conditions over the next four months, 40 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from 37.5 percent in August; 52 percent believe business conditions will remain the same over the next four months, up from 45.8 percent the previous month and just 8 percent believe business conditions will worsen, down from 16.7 percent in August.
- Almost half (44 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 41.7 percent in August; 52 percent believe demand will remain the same during the same four-month period, up from 37.5 percent the previous month. Only 4 percent believe demand will decline, a drop from 20.8 percent in August.
- Nearly a quarter (24 percent) of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 20.8 percent in August while 76 percent of executives indicate they expect the same access to capital to fund business, up from 75 percent last month. None expect less access to capital, down from 4.2 percent the previous month.
- When asked, 20 percent of the executives report they expect to hire more employees over the next four months, a slight decrease from 20.8 percent in August. More than half (68 percent) expect no change in headcount over the next four months, down from 70 percent last month. Only 12 percent expect to hire fewer employees, up from 8.3 percent in August.
- None of the leadership evaluate the current U.S. economy as excellent, unchanged from the previous month and 96 percent evaluate the economy as fair, up from 91.7 percent in August, while 4 percent evaluate it as poor, down from 8.3 percent last month.
- A quarter (24 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, down from 37.5 percent in August and 76 percent indicate they believe the U.S. economy will stay the same over the next six months, a jump up from 41.7 percent last month. None believe economic conditions in the U.S. will worsen over the next six months, a decrease from 20.8 percent the previous month.
- In September, 36 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 33.3 percent the previous month; 56 percent believe there will be no change in business development spending, down from 62.5 percent in August. Only 8 percent believe there will be a decrease in spending, up from 4.2 percent last month.
September 2024 MCI-EFI survey comments from industry executive leadership
Bank, Small Ticket
“I am optimistic for 2024 and 2025 as opportunities are in solid supply if you have liquidity to fund and scale your balance sheet. While there are many examples of uncertainty to point to today, I find businesses are adapting and finding ways to win and it is an opportunity for us to adapt and grow with them. Even with solid liquidity, delinquency and portfolio performance are challenging for many, so credit discipline is required more now than over the last few years,” says David Normandin, president and CEO, Wintrust Specialty Finance.
Independent, Small Ticket
“There is still concern of the risk that the Fed will not be able to guide to a soft landing and inflation will remain sticky. Consumer debt and U.S. debt levels are unsustainable,” says Mark Bonanno, president and COO, North Mill Equipment Finance.
“Interest rates should begin to fall this month and the federal election is around the corner. We expect business activity will begin to improve soon,” says James D. Jenks, CEO, Global Finance and Leasing Services, LLC.
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/.
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