Confidence in equipment financing dwindles, again

The Equipment Leasing and Finance Foundation releases a report on business conditions and expectations within the equipment finance industry.

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Reports from the Equipment Leasing & Finance Foundation show a declining trend in confidence in equipment financing. Its index, known as Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), was 63.9 in January, 61.8 in February, 58.2 in March and 56.1 in April. This is a decline of 12.2% for the year. The May index report is due out within the next two weeks.

The index aims to gauge business conditions and expectations for the future, based on feedback from equipment finance managers. Such a response came from Jim DeFrank, executive vice president and chief operating officer at Isuzu Finance of America, who said, “There’s a huge pent-up demand for all kinds of products. In transportation, last mile vehicles are in high demand, and we see that continuing for at least 12-18 months. Once the supply chain catches up, we will see some sort of return to normalcy in the equipment finance industry.

When asked to rate their business conditions over the next few months, 14.8% of executives who responded said they believed business conditions would improve over the next four months, down from to 21.4% in March. 63% believe trading conditions will remain the same over the next four months, up from 50% the previous month. 22.2% think business conditions will deteriorate, down from 28.6% in March. Other findings include:

  • 29.6% of respondents believe the demand for leases and loans to finance capital expenditure (capex) will increase in the coming months, up from 25% in March. 55.6% believe demand will “stay the same” over the same period, down from 75% the previous month. 14.8% believe demand will decline, compared to none in March.
  • 22.2% of respondents expect better access to capital to finance equipment acquisitions over the next four months, up from 21.4% in March. 77.8% of executives say they expect the “same” access to capital to fund their businesses, down from 78.6% last month. None expect “less” access to capital, unchanged from March.
  • Surveyed, 40.7% of executives say they expect to hire more employees in the next four months, up from 46.4% in March. 59.3% expect no change in the workforce over the next four months, up from 50% last month. None expect to hire fewer employees, down from 3.6% in March.
  • 14.8% of executives rated the US economy as “excellent”, up from 3.6% the previous month. 74.1% of executives rate the current US economy as “fair,” up from 85.7% in March. 11.1% rate it as “poor”, a slight increase from 10.7% last month.
  • 7.4% of respondents think US economic conditions will improve over the next six months, relatively unchanged from 7.1% in March. 51.9% say they think the US economy will stay the same over the next six months, down from 57.1% last month. 40.7% believe that economic conditions in the United States will deteriorate over the next six months, an increase from 35.7% the previous month. “The Fed’s stated stance of raising rates in an attempt to control inflation will begin to affect the economy. As consumers spend their remaining stimulus funding this year, there will be less money available for discretionary spending, and rapidly rising commodity costs will hurt those at the bottom of the income scale. said Bruce J. Winter, President of FSG Capital. .
  • In April, 29.6% of respondents said they believed their company would increase spending on business development activities over the next six months, up from 42.9% the previous month. 66.7% think there will be “no change” in business development spending, up from 57.1% in March. 3.7% think there will be a decrease in spending, compared to none last month.

Comments from the April 2021 MCI-EFI survey from industry executives:

Independent, short post“The Russian-Ukrainian war will have economic fallout around the world in the short term. James D. Jenks, CEO, Global Finance and Leasing Services, LLC

Independent, Middle Ticket“The Fed’s stated stance of raising rates in an attempt to tame inflation will begin to affect the economy. As consumers spend their remaining stimulus funding this year, there will be less money available for discretionary spending, and rapidly rising commodity costs will hurt those at the bottom of the income scale. . Bruce J. Winter, President, FSG Capital, Inc.

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