Equipment finance industry confidence eases in September
Overall, confidence in the equipment finance market is 48.7, a decrease from the August index of 50.
The Equipment Leasing & Finance Foundation released its September 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) on September 22, 2022. 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. Overall, confidence in the equipment finance market is 48.7, a decrease from the August index of 50.
When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, President, FSG Capital, Inc., said, "The Fed has made it crystal clear that bringing inflation back to target is its number one goal. More increases to the Fed funds rate are coming, as is quantitative tightening to the tune of $95 billion per month. Highly leveraged participants in our industry will pay the price, as well as highly leveraged borrowers/lessees. While the definition of a true recession is being hotly debated, there is little doubt that more challenging times are ahead and the hopes of a ‘soft landing’ are much less likely.”
September 2022 Survey Results:
The overall MCI-EFI is 48.7, a decrease from the August index of 50.
- When asked to assess their business conditions over the next four months, 3.6 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 14.8 percent in August; 75 percent believe business conditions will remain the same over the next four months, up from 51.9 percent the previous month and 21.4 percent believe business conditions will worsen, a decrease from 33.3 percent in August.
- 10.7 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 7.7 percent in August; 71.4 percent believe demand will “remain the same” during the same four-month period, a decrease from 76.9 percent the previous month and 17.9 percent believe demand will decline, up from 15.4 percent in August.
- 14.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 7.4 percent in August; 71.4 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 85.2 percent last month and 14.3 percent expect “less” access to capital, up from 7.4 percent the previous month.
- When asked, 28.6 percent of the executives report they expect to hire more employees over the next four months, up from 25.9 percent in August. 64.3 percent expect no change in headcount over the next four months, a decrease from 74.1 percent last month and 7.1 percent expect to hire fewer employees, up from none in August.
- Just 7.1 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from none the previous month. 71.4 percent of the leadership evaluate the current U.S. economy as “fair,” down from 85.2 percent in August and 21.4 percent evaluate it as “poor,” an increase from 14.8 percent last month.
- Only 7.1 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 11.1 percent in August; 39.3 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 51.9 percent last month and 53.6 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 37 percent the previous month.
- In September, 28.6 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 29.6 percent the previous month; 71.4 percent believe there will be “no change” in business development spending, up from 70.4 percent in August. None believe there will be a decrease in spending, unchanged from last month.
https://www.leasefoundation.org/industry-resources/monthly-confidence-index/
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