Equipment finance industry confidence steady in June
The Equipment Leasing & Finance Foundation releases the June 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI); overall, confidence in the equipment finance market is 50.9, steady with the May index of 49.6.
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.
When asked about the outlook for the future, MCI-EFI survey respondent Glenn Davis, president, RESIDCO, said, “Interest rates are a major concern. Uncertainties related to Fed action or inaction, as well as the continuing war in Ukraine will weigh heavily on the economy.”
June 2022 survey results:
The overall MCI-EFI is 50.9, steady with the May index of 49.6.
- When asked to assess their business conditions over the next four months, 11.1 percent of executives responding said they believe business conditions will improve over the next four months, an increase from 6.9 percent in May. 55.6 percent believe business conditions will remain the same over the next four months, down from 62.1 percent the previous month. 33.3 percent believe business conditions will worsen, an increase from 31 percent in May.
- Also, 11.1 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 10.3 percent in May. 66.7 percent believe demand will “remain the same” during the same four-month period, an increase from 65.5 percent the previous month. 22.2 percent believe demand will decline, down from 24.1 percent in May.
- Just 22.2 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 13.8 percent in May. 77.8 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 86.2 percent last month. None expect “less” access to capital, unchanged from the previous month.
- When asked, 29.6 percent of the executives report they expect to hire more employees over the next four months, down from 48.3 percent in May. 66.7 percent expect no change in headcount over the next four months, an increase from 44.8 percent last month. 3.7 percent expect to hire fewer employees, down from 6.9 percent in May.
- Only 7.4 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from 3.5 percent the previous month. 74.1 percent of the leadership evaluate the current U.S. economy as “fair,” down from 79.3 percent in May. 18.5 percent evaluate it as “poor,” an increase from 17.2 percent last month.
- Next, 7.4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.5 percent in May. 37 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 27.6 percent last month. 55.6 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 69 percent the previous month.
- In June, 40.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 34.5 percent the previous month. 59.3 percent believe there will be “no change” in business development spending, down from 65.5 percent in May. None believe there will be a decrease in spending, unchanged from last month.
June 2022 MCI-EFI survey comments from industry executive leadership:
Bank, Small Ticket
“The equipment leasing and finance business adapts to change and finds ways to win in difficult environments. The rising rate environment is a healthy change from the past decade and creates the opportunity to build margin back into business models and strengthen the community.” -- David Normandin, CLFP, president and CEO, Wintrust Specialty Finance
Independent, Small Ticket
“When the supply chain is repaired, and should demand evaporate, we will have a bigger issue than we do today.” -- James D. Jenks, CEO, Global Finance and Leasing Services, LLC
Bank, Middle Ticket
“Supply chain issues continue to linger, especially with light-duty trucks. We continue to see interest from our customers with large expansion projects to lock in rates while they remain at historically low levels.” -- Michael Romanowski, president, Farm Credit Leasing
Survey results are posted at 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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