Equipment finance industry confidence in December reaches new three-year high
The Equipment Leasing & Finance Foundation has released its December 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI); overall, confidence in the equipment finance market is 68.8, surpassing the November index of 67.5, the previous three-year high.
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.
“Over the last year, the equipment finance industry has witnessed changes in liquidity, volatile swap rates, higher delinquency, and credit charges returning to a more normalized state. Through this, we have adapted and created better solutions to meet our customers’ needs. Now that the election is over and the Fed has begun cutting rates, I think there is more surety for businesses to confidently invest in their business. This will create good opportunities for the equipment finance industry in 2025,” says David Normandin, president and CEO at Wintrust Specialty Finance.
December 2024 survey results
The overall MCI-EFI is 68.8, up from the November index of 67.5.
- Business conditions - When asked to assess their business conditions over the next four months, 57.1 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from 43.3 percent in November; 32.1 percent believe business conditions will remain the same over the next four months, down from 50 percent the previous month. Just 10.7 percent believe business conditions will worsen, up from 6.7 percent in November.
- Capex demand – 53.6 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 48.3 percent in November while 42.9 percent believe demand will remain the same during the same four-month period, down from 44.8 percent the previous month. Only 3.6 percent believe demand will decline, a decrease from 6.9 percent in November.
- Access to capital – 28.6 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 37.9 percent in November but 71.4 percent of executives indicate they expect the same access to capital to fund business, up from 62.1 percent last month. None expect less access to capital, unchanged from the previous month.
- Employment - 46.4 percent of the executives report they expect to hire more employees over the next four months, an increase from 44.8 percent in November.and 42.9 percent expect no change in headcount over the next four months, down from 48.3 percent last month. Only 10.7 percent expect to hire fewer employees, up from 6.9 percent in November.
- U.S. economy – 7.1 percent of the leadership evaluate the current U.S. economy as excellent, up from none the previous month and 89.3 percent evaluate the economy as fair, down from 96.7 percent in November. Just 3.6 percent evaluate it as poor, relatively unchanged from 3.3 percent last month.
- Economic outlook – 53.6 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, down from 60 percent in November while 35.7 percent indicate they believe the U.S. economy will stay the same over the next six months, down from 36.7 percent last month. 10.7 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 3.3 percent the previous month.
- Business development spending – In December, 46.4 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 36.7 percent the previous month and 50 percent believe there will be no change in business development spending, a decrease from 56.7 percent in November. Just 3.6 percent believe there will be a decrease in spending, down from 6.7 percent last month.
December 2024 MCI-EFI survey comments from industry executive leadership
Bank, Small Ticket
“Political changes at the federal level are encouraging to small business. Changes to green energy policy and federal oversight [Section 1071] could lead to a more robust environment.” -- Charles Jones, senior vice president, 1st Equipment Finance, Inc.
Captive, Small Ticket
“Economic resilience and growth, the continued adoption of technology and digitization, and government infrastructure initiatives are increasing demand. The new administration may slow the shift toward sustainability and the equipment requirements needed.” -- Jim DeFrank, executive vice president and COO, Isuzu Finance of America, Inc.
Independent, Small Ticket
“The president-elect is expected to make a number of changes that will positively impact the U.S. economy.” -- James D. Jenks, CEO, Global Finance and Leasing Services, LLC
Survey results are posted here. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link.
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