Equipment finance industry confidence eases in February
Overall, confidence in the equipment finance market eased to 66.9, down from the January index of 69.6, after three consecutive months of increases.
The Equipment Leasing & Finance Foundation released the February 2025 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and future expectations as reported by key executives from the $1.3 trillion equipment finance sector.
“I am optimistic about the opportunities that may happen in 2025. Business confidence is strong, which will lead to additional investment into capital equipment. Additionally, while inflation is still higher than desired, it is a marked improvement from the recent past. With that said, delinquency and credit quality remain a challenge with bankruptcy rates continuing to rise and stress in consumer auto and credit card debt. 2025 may not be an easy year, but there will be opportunities to leverage if you are nimble and creative in solving challenges,” says David Normandin, CLFP, president and chief executive officer, Wintrust Specialty Finance.
February 2025 survey results
The overall MCI-EFI is 66.9, down from the January index of 69.6.
- Business conditions - When asked to assess their business conditions over the next four months, 53.6 percent of the executives responding said they believe business conditions will improve over the next four months, a decrease from 57.1 percent in January. 35.7 percent believe business conditions will remain the same over the next four months, down from 38.1 percent the previous month. 10.7 percent believe business conditions will worsen, up from 4.8 percent in January.
- Capex demand – Almost half -- 46.4 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 47.6 percent in January and 50 percent believe demand will remain the same during the same four-month period, up from 47.6 percent the previous month. 3.6 percent believe demand will decline, a decrease from 4.8 percent in January.
- Access to capital – Just 25 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 28.6 percent in January while 75 percent of executives indicate they expect the same access to capital to fund business, up from 71.4 percent the previous month. None expect less access to capital, unchanged from January.
- Employment - When asked, 35.7 percent of the executives report they expect to hire more employees over the next four months, a decrease from 47.6 percent in January and 64.3 percent expect no change in headcount over the next four months, up from 52.4 percent last month. None expect to hire fewer employees, unchanged from January.
- U.S. economy – Only 3.6 percent of the leadership evaluate the current U.S. economy as excellent, down from 9.5 percent the previous month. 92.9 percent evaluate the economy as fair, up from 85.7 percent in January. 3.6 percent evaluate it as poor, down from 4.8 percent last month.
- Economic outlook – Almost half (48.2 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, down from 52.4 percent in January; 40.7 percent indicate they believe the U.S. economy will stay the same over the next six months, down from 47.6 percent last month. Only 11.1 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from none the previous month.
- Business development spending – In February, 39.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 38.1 percent the previous month, while 60.7 percent believe there will be no change in business development spending, a decrease from 61.9 percent in January. None believe there will be a decrease in spending, unchanged from last month.
February 2025 MCI-EFI survey comments from industry executive leadership:
Bank, Small Ticket
“The Trump Administration has taken a hard line on economic relations. Assuming this will bolster negotiations, hope is building that the result will be a stronger U.S. economy.” -- Charles Jones, senior vice president, 1st Equipment Finance, Inc.
Independent, Small Ticket
“With this administration, we expect a gradual improvement in business conditions into the foreseeable future. We also expect the performance of portfolios to gradually improve as well.” -- 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/.
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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