Equipment finance industry confidence consistent over three months
Overall, confidence in the equipment finance market is 50.7, steady with the May and June MCIs of 50.7 and 50.2, respectively.
Equipment Leasing & Finance Foundation releases the July 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) July 19, 2024. 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.
“Companies are falling behind on capex, but the need for replacement is necessary, despite rising costs and increased financing expenses. Upgrades are essential for growth and to stay competitive, though it’s unlikely costs will decrease in the foreseeable future,” says Lyndon Thompson, president, Byline Financial Group.
July 2024 survey results
The overall MCI-EFI is 50.7, steady with the June index of 50.2.
- When asked to assess their business conditions over the next four months, 3.9 percent of the executives responding said they believe business conditions will improve over the next four months, a decrease from 11.5 percent in June; 76.9 percent believe business conditions will remain the same over the next four months, unchanged from the previous month and 19.2 percent believe business conditions will worsen, up from 11.5 percent in June.
- Only 11.5 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 7.4 percent in June; 73.1 percent believe demand will remain the same during the same four-month time period, down from 77.8 percent the previous month and 15.4 percent believe demand will decline, a slight increase from 14.8 percent in June.
- Only 19.2 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, unchanged from June, while 76.9 percent of executives indicate they expect the same access to capital to fund business, up from 73.1 percent last month and 3.9 percent expect less access to capital, down from 7.7 percent the previous month.
- When asked, 23.1 percent of the executives report they expect to hire more employees over the next four months, a decrease from 25.9 percent in June and 69.2 percent expect no change in headcount over the next four months, up from 66.6 percent last month. Only 7.7 percent expect to hire fewer employees, relatively unchanged from June.
- None of the leadership evaluate the current U.S. economy as excellent, down from 3.9 percent the previous month while 84.6 percent of the leadership evaluate the current U.S. economy as fair, up from 76.9 percent in June. Only 15.4 percent evaluate it as poor, down from 19.2 percent last month.
- Less than a fifth (19.2 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, up from 14.8 percent in June while 57.7 percent indicate they believe the U.S. economy will stay the same over the next six months, an increase from 48.2 percent last month. Almost a quarter (23.1 percent) believe economic conditions in the U.S. will worsen over the next six months, a decrease from 37 percent the previous month.
- In July, 19.2 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 14.8 percent the previous month while 73.1 percent believe there will be no change in business development spending, down from 77.8 percent in June; 7.7 percent believe there will be a decrease in spending, relatively unchanged from last month.
July 2024 MCI-EFI survey comments from industry executive leadership:
Bank, small ticket
“The current environment in small ticket equipment leasing is testing business models. Some will demonstrate a strong resilience and others will illustrate portfolio performance issues. Either way, times of stress strengthen business practices and make our industry stronger in the long run. I am confident that the equipment leasing and finance industry will become stronger and adapt to continue to meet the needs of our customers in new ways,” says David Normandin, president and chief executive officer, Wintrust Specialty Finance.
Independent, small ticket
“My main concern is the Fed will remain stubbornly restrictive and overshoot sticking to a 2 percent inflation mandate. Very little makes me optimistic, with the impending election most likely causing a stalemate,” says Mark Bonanno, president and chief operating officer, North Mill Equipment Finance.
“Higher than acceptable inflation, high interest rates, and robust federal government spending continue to put a drag on the economy,” says James D. Jenks, CEO, Global Finance and Leasing Services, LLC.
Survey results are posted at 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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