Equipment finance industry confidence at all-time high in April
The Equipment Leasing & Finance Foundation reports the April 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) is 76.1, an all-time high and an increase from the March index of 67.7.
The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector.
“We are starting to see pent-up demand for goods and services leading to expanded capital budgets for equipment to produce it and transportation to deliver it. With favorable interest rates, businesses are increasing spending again to stay responsive in a rapidly evolving environment,” says Aylin Cankardes, president, Rockwell Financial Group.
April 2021 survey results
The overall MCI-EFI is 76.1, an increase from the March index of 67.7. When asked to assess their business conditions over the next four months, 73.3 percent of executives responding said they believe business conditions will improve over the next four months, up from 50 percent in March. 23.3 percent believe business conditions will remain the same over the next four months, down from 46.4 percent the previous month. 3.3 percent believe business conditions will worsen, unchanged from March.
Seventy 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 42.9 percent in March; 30 percent believe demand will remain the same during the same four-month time period, a decrease from 53.6 percent the previous month. None believe demand will decline, down from 3.6 percent in March.
Next, 43.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 28.6 percent in March. 56.7 percent of executives indicate they expect the same access to capital to fund business, a decrease from 71.4 percent last month. None expect less access to capital, unchanged from the previous month.
When asked, 43.3 percent of the executives report they expect to hire more employees over the next four months, up from 42.9 percent in March; 56.7 percent expect no change in headcount over the next four months, a decrease from 57.1 percent last month. None expect to hire fewer employees, unchanged from March.
Also, 13.3 percent of the leadership evaluate the current U.S. economy as excellent, an increase from 3.6 percent the previous month. 80 percent of the leadership evaluate the current U.S. economy as fair, up from 78.6 percent in March. 6.7 percent evaluate it as poor, down from 17.9 percent last month.
Almost three-fourths (73.3 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, an increase from 60.7 percent in March. 23.3 percent indicate they believe the U.S. economy will stay the same over the next six months, a decrease from 32.1 percent last month. 3.3 percent believe economic conditions in the U.S. will worsen over the next six months, down from 7.1 percent the previous month.
In April, 46.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 39.3 percent last month. 53.3 percent believe there will be no change in business development spending, a decrease from 60.7 percent in March. None believe there will be a decrease in spending, unchanged from last month.
April 2021 MCI-EFI survey comments from industry executive leadership
Bank, Small Ticket: “As vaccination levels continue to increase and confidence to re-enter social environments rises, increased spending will result. This progression to a widening economy should serve to strengthen demand for commercial assets and the financing of those assets. We are optimistic that business will recover, and yet are focused on managing the risk of those that are still highly impacted and will take additional time to find their footing.” -- David Normandin, CLFP, president and CEO, Wintrust Specialty Finance
Bank, Middle Ticket: “We continue to see good demand for capital expenditures from the markets we serve. We have noticed tighter spreads as competition becomes more active.”-- Michael Romanowski, president, Farm Credit Leasing
Independent, Large Ticket: “Early concerns are the new Biden tax plan and proposed changes to bonus depreciation. Optimistically, given the rebound in the economy short-term demand for equipment finance should benefit.” -- Vincent Belcastro, group head syndications, Element Fleet Management
Access the MCI-EFI
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast eNewsletter, and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.
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