Equipment finance industry confidence edges higher in July
Overall, confidence in the equipment finance market is 72.9, an increase from the June index of 71.3.
The Equipment Leasing & Finance Foundation released its July 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) July 23. The index reports a qualitative assessment of 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 Bruce J. Winter, President, FSG Capital, Inc., said, “Many industries served by the equipment finance segment are back to full throttle, with only certain negatively impacted industries still working toward recovery. This has created growing demand for our products and services and all signs point to increasing activity over the next few quarters. Inflation concerns, driven by unprecedented federal stimulus spending, are front and center and the jury is out as to whether the Fed has correctly forecasted only a short-term bump in inflation.”
July 2021 Survey Results:
• When asked to assess their business conditions over the next four months, 58.6 percent of executives responding said they believe business conditions will improve over the next four months, up from 42.3 percent in June. 41.4 percent believe business conditions will remain the same over the next four months, down from 57.7 percent the previous month. None believe business conditions will worsen, unchanged from June.
• 55.2 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 51.9 percent in June. 41.4 percent believe demand will remain the same during the same four-month time period, a decrease from 48.2 percent the previous month; 3.5 percent believe demand will decline, up from none in June.
• 37.9 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 32.1 percent in June; 62.1 percent of executives indicate they expect the same access to capital to fund business, a decrease from 67.9 percent last month. None expect less access to capital, unchanged from the previous month.
• When asked, 37.9 percent of the executives report they expect to hire more employees over the next four months, down from 46.2 percent in June; 62.1 percent expect no change in headcount over the next four months, an increase from 50 percent last month. None expect to hire fewer employees, down from 3.9 percent in June.
• 27.6 percent of the leadership evaluate the current U.S. economy as excellent, an increase from 22.2 percent the previous month. 72.4 percent of the leadership evaluate the current U.S. economy as fair, down from 77.8 percent in June. None evaluate it as poor, unchanged from last month.
• 48.3 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, a decrease from 51.9 percent in June; 51.7 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. None believe economic conditions in the U.S. will worsen over the next six months, unchanged from the previous month.
• In July, 51.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 48.2 percent last month and 48.3 percent believe there will be no change in business development spending, a decrease from 51.9 percent in June. None believe there will be a decrease in spending, unchanged from last month.
July 2021 MCI-EFI survey comments from industry executive leadership:
Bank, small ticket
“The volatility of business re-opening continues, and the struggle to maintain a consistent workforce and supply chain challenges are very real. As an industry, it will be valuable to lean on our heritage of being flexible and disciplined to ensure we continue to grow through this volatile environment and thrive with healthy performing portfolios as the economic environment improves.” -- David Normandin, CLFP, President and CEO, Wintrust Specialty Finance
Bank, middle ticket
“We are seeing good demand for equipment and structure financing to take advantage of the low-rate environment. The main headwind we are facing is supply chain challenges which has delayed delivery of new equipment and is impacting the completion of facility construction.” -- Michael Romanowski, President, Farm Credit Leasing
"Key is seeing equipment demand increasing, and we are optimistic about the second half of 2021. Frequently, we find we are competing against cash as often as we are another bank." -- Adam Warner, President, Key Equipment Finance
Captive, middle ticket
“As the market landscape evolves, we continue to see equipment financing being used as a strategic tool to provide optionality. In the near term in the U.S., we’re fully focused on the opportunity in front of us.” -- Jon Biorkman, President, Healthcare Financial Services, GE Healthcare
Survey results are posted on the Foundation website,
https://www.leasefoundation.org/industry-resources/monthly-confidence-index/
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