Equipment finance industry confidence improves again in February
The Equipment Leasing & Finance Foundation released its February 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI); Overall, confidence in the equipment finance market is 51.8, an increase from the January index of 48.5.
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.
“We still see pent-up demand in the light and medium-duty segment of transportation. However, we feel it will wane by the third or fourth quarter of this year,” says Jim DeFrank, executive vice president and CEO, Isuzu Finance of America, Inc.
February 2023 survey results:
The overall MCI-EFI is 51.8, an increase from the January index of 48.5.
- When asked to assess their business conditions over the next four months, 16.1 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from none in January. 61.3 percent believe business conditions will remain the same over the next four months, down from 69.2 percent the previous month. 22.6 percent believe business conditions will worsen, a decrease from 30.8 percent in January.
- Just 9.7 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from none in January. 71 percent believe demand will remain the same during the same four-month period, a decrease from 88.5 percent the previous month. Curiously, 19.4 percent believe demand will decline, up from 11.5 percent in January.
- Only 12.9 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 11.5 percent in January. Almost three quarters (74.2 percent) of executives indicate they expect the same access to capital to fund business, an increase from 73.1 percent last month. 12.9 percent expect less access to capital, down from 15.4 percent the previous month.
- When asked, 38.7 percent of the executives report they expect to hire more employees over the next four months, unchanged from January. Slightly more than half (54.8 percent) expect no change in headcount over the next four months, a decrease from 61.5 percent last month. 6.5 percent expect to hire fewer employees, up from none in January.
- None of the leadership evaluate the current U.S. economy as excellent, unchanged from the previous month. 87.1 percent of the leadership evaluate the current U.S. economy as fair, up from 84.6 percent in January. 12.9 percent evaluate it as poor, a decrease from 15.4 percent last month.
- Only 3.2 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, a decrease from 7.7 percent in January. Slightly more than half (54.8 percent) indicate they believe the U.S. economy will stay the same over the next six months, a decrease from 57.7 percent last month. 41.9 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 34.6 percent the previous month.
- In February, 51.6 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 23.1 percent the previous month. Only 41.9 percent believe there will be no change in business development spending, down from 73.1 percent in January. 6.5 percent believe there will be a decrease in spending, up from 3.9 percent last month.
February 2023 MCI-EFI Survey comments from industry executive leadership:
Independent, Small Ticket
“Recession is likely staying on the sidelines as long as there is a shortage of employees to fill open job positions.” -- 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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