Equipment finance industry confidence reaches three-year high
Overall, confidence in the equipment finance market is 67.5, up from the October index of 61.8, and the highest level since August 2021, reports the Equipment Leasing & Finance Foundation in its November report.
The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1.3 trillion equipment finance sector. Approximately half of the survey responses were submitted prior to the elections and half were submitted after.
“Businesses still need equipment. Political uncertainty has had an impact and should resolve itself. With the election behind us, businesses will need to continue to operate and look to grow. Calmer heads seem to be prevailing and the industry is coming back. Delinquency has hopefully leveled, and lenders are licking their wounds and looking forward,” says survey respondent Charles Jones, senior vice president at 1st Equipment Finance, Inc.
November 2024 survey results:
The overall MCI-EFI is 67.5, up from the October index of 61.8.
- Business conditions – When asked to assess their business conditions over the next four months, 43.3 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from 37.9 percent in October, while 50 percent believe business conditions will remain the same over the next four months, down from 51.7 percent the previous month. Just 6.7 percent believe business conditions will worsen, down from 10.3 percent in October.
- Capex demand – Nearly half (48.3 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 44.8 percent in October and 44.8 percent believe demand will remain the same during the same four-month time period, up from 41.4 percent the previous month. Only 6.9 percent believe demand will decline, a decrease from 13.8 percent in October.
- Access to capital – More than one third (37.9 percent) of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 27.6 percent in October and 62.1 percent of executives indicate they expect the same access to capital to fund business, down from 72.4 percent last month. None expect less access to capital, unchanged from the previous month.
- Employment – When asked, 44.8 percent of the executives report they expect to hire more employees over the next four months, an increase from 24.1 percent in October and 48.3 percent expect no change in headcount over the next four months, down from 65.5 percent last month. 6.9 percent expect to hire fewer employees, down from 10.3 percent in October.
- U.S. economy – None of the leadership evaluate the current U.S. economy as excellent, down from 6.9 percent the previous month but 96.7 percent evaluate the economy as fair, up from 93.1 percent in October. Only 3.3 percent evaluate it as poor, an increase from none last month.
- Economic outlook – More than half (60 percent) of the survey respondents believe that U.S. economic conditions will get better over the next six months, up from 37.9 percent in October and 36.7 percent indicate they believe the U.S. economy will stay the same over the next six months, down from 51.7 percent last month. Just 3.3 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 10.3 percent the previous month.
- Business development spending – In November, 36.7 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. 56.7 percent believe there will be no change in business development spending, an increase from 55.2 percent in October. Just 6.7 percent believe there will be a decrease in spending, down from 10.3 percent last month.
November survey comments from industry executive leadership:
Independent, small ticket
“I’m still concerned about the state of the consumer and the U.S. from a debt load perspective, but more optimistic on growth after the U.S. election cycle,” says Mark Bonanno, president and COO at North Mill Equipment Finance.
“The election is over. Looking forward, Trump's policies will improve the economy and begin reducing government over-regulation,” says 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/. 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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