Equipment finance industry confidence lower in July
The Equipment Leasing & Finance Foundation releases the July 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI): overall, confidence in the equipment finance market is 46.1, a decrease from the June index of 50.9.
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 Adam Warner, president, Key Equipment Finance, said, "While people are likely to look with trepidation at recent federal government reactions to energy policy, inflation and our positioning with global threats, one aspect of our economy that remains strong is the move toward implementing new technologies to help businesses increase productivity and efficiency, and best utilize the human resources they have available.”
July 2022 Survey Results:
The overall MCI-EFI is 46.1, a decrease from the June index of 50.9
- When asked to assess their business conditions over the next four months, 3.7 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 11.1 percent in June; 63 percent believe business conditions will remain the same over the next four months, up from 55.6 percent the previous month and 33.3 percent believe business conditions will worsen, unchanged from June.
- Only 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, unchanged from June; 55.6 percent believe demand will “remain the same” during the same four-month period, a decrease from 66.7 percent the previous month; and 33.3 percent believe demand will decline, up from 22.2 percent in June.
- Just 11.1 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 22.2 percent in June. 81.5 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 77.8 percent last month. Only 7.4 percent expect “less” access to capital, up from none the previous month.
- When asked, 18.5 percent of the executives report they expect to hire more employees over the next four months, down from 29.6 percent in June; 77.8 percent expect no change in headcount over the next four months, an increase from 66.7 percent last month and 3.7 percent expect to hire fewer employees, unchanged from June.
- 11.1 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from 7.4 percent the previous month; 77.8 percent of the leadership evaluate the current U.S. economy as “fair,” up from 74.1 percent in June. Also, 11.1 percent evaluate it as “poor,” a decrease from 18.5 percent last month.
- Only 7.4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from June; 40.7 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 37 percent last month and 51.9 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 55.6 percent the previous month.
- In July, 22.2 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 40.7 percent the previous month; 74.1 percent believe there will be “no change” in business development spending, up from 59.3 percent in June. Just 3.7 percent believe there will be a decrease in spending, up from none last month.
July 2021 MCI-EFI survey comments from industry executive leadership:
Bank, Small Ticket
“I am optimistic about the rising rate environment, specifically that it will bring margin back into our business which will be healthy for the industry long term. I am concerned about the volatile economy that we are experiencing.” -- David Normandin, CLFP, president and CEO, Wintrust Specialty Finance
Independent, Small Ticket
“If the federal government will stop flooding the economy with money, inflation should subside and the economy will respond accordingly.” -- 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/, 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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