Equipment finance industry confidence ticks up in June
Overall, confidence in the equipment finance market is 44.1, an increase from the May index of 40.6.
The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. The Monthly Confidence Index survey is conducted by the Equipment Leasing & Finance Foundation.
“We believe that as banks’ senior credit facility lending tightens, there will be more opportunity for equipment lessors to supply supplemental capital. We are seeing evidence of this today,” says Jonathan Albin, Chief Operating Officer, Nexseer Capital.
June 2023 survey results:
The overall MCI-EFI is 44.1, an increase from the May index of 40.6.
- When asked to assess their business conditions over the next four months, 3.3 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from none in May; and 73.3 percent believe business conditions will remain the same over the next four months, up from 51.9 percent the previous month. Nearly a quarter (23.3 percent) believe business conditions will worsen, a decrease from 48.2 percent in May.
- Just 6.7 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 3.6 percent in May. Two thirds (66.7 percent) believe demand will remain the same during the same four-month time period, an increase from 53.6 percent the previous month but 26.7 percent believe demand will decline, down from 42.9 percent in May.
- Only 6.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 10.7 percent in May and 76.7 percent of executives indicate they expect the same access to capital to fund business, an increase from 75 percent last month. A minority (16.7 percent) expect less access to capital, up from 14.3 percent the previous month.
- When asked, 13.3 percent of the executives report they expect to hire more employees over the next four months, a decrease from 17.9 percent in May while76.7 percent expect no change in headcount over the next four months, an increase from 67.9 percent last month. Ten percent expect to hire fewer employees, down from 14.3 percent in May.
- None of the leadership evaluate the current U.S. economy as excellent, unchanged from the previous month. 83.3 percent of the leadership evaluate the current U.S. economy as fair, down from 85.7 percent in May. 16.7 percent evaluate it as poor, an increase from 14.3 percent last month.
- Only 6.7 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, an increase from 3.6 percent in May. Forty percent indicate they believe the U.S. economy will stay the same over the next six months, an increase from 32.1 percent last month. Slightly more than half (53.3 percent) believe economic conditions in the U.S. will worsen over the next six months, a decrease from 64.3 percent the previous month.
- In June, 30 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 35.7 percent the previous month. More than half (56.7 percent) believe there will be no change in business development spending, up from 53.6 percent in May. Only 13.3 percent believe there will be a decrease in spending, up from 10.7 percent last month.
June 2023 MCI-EFI survey comments from industry executive leadership:
Bank, Small Ticket
“The equipment leasing and finance industry is resilient and will weather the liquidity shortage that we are currently in, as well as the looming recession. There are and will continue to be opportunities that exist in this environment, and nimble organizations that are capitalized will be well positioned to grow during this period of uncertainty,” says David Normandin, president and chief executive officer, Wintrust Specialty Finance.
Bank, Middle Ticket
“Businesses need equipment to operate. While business expansion may be limited, the need to replace equipment will remain. Our credit criteria has not changed,” says Charles Jones, senior vice president, 1st Equipment Finance (FNCB Bank).
Survey results are posted on the Foundation website,
https://www.leasefoundation.org/industry-resources/monthly-confidence-index/
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