Equipment Finance Industry Confidence Lower in July

The Equipment Leasing & Finance Foundation recently released the July 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 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 46.1, a decrease from the June index of 50.9.

When asked about the outlook for the future, MCI-EFI survey respondent Adam Warner, President, Key Equipment Finance, said, “While people are likely to look with trepidation at recent federal government reactions to energy policy, inflation, and our positioning with global threats, one aspect of our economy that remains strong is the move toward implementing new technologies to help businesses increase productivity and efficiency, and best utilize the human resources they have available.”

July 2022 Survey Results:

The overall MCI-EFI is 46.1, a decrease from the June index of 50.9.
 
•   When asked to assess their business conditions over the next four months, 3.7% of executives responding said they believe business conditions will improve over the next four months, a decrease from 11.1% in June. 63% believe business conditions will remain the same over the next four months, up from 55.6% the previous month. 33.3% believe business conditions will worsen, unchanged from June.

•   11.1% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, unchanged from June. 55.6% believe demand will “remain the same” during the same four-month time period, a decrease from 66.7% the previous month. 33.3% believe demand will decline, up from 22.2% in June.

•   11.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 22.2% in June. 81.5% of executives indicate they expect the “same” access to capital to fund business, an increase from 77.8% last month. 7.4% expect “less” access to capital, up from none the previous month.

•   When asked, 18.5% of the executives report they expect to hire more employees over the next four months, down from 29.6% in June. 77.8% expect no change in headcount over the next four months, an increase from 66.7% last month. 3.7% expect to hire fewer employees, unchanged from June.

•   11.1% of the leadership evaluate the current U.S. economy as “excellent,” an increase from 7.4% the previous month. 77.8% of the leadership evaluate the current U.S. economy as “fair,” up from 74.1% in June. 11.1% evaluate it as “poor,” a decrease from 18.5% last month.

•   7.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from June. 40.7% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 37% last month. 51.9% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 55.6% the previous month.

•   In July 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 40.7% the previous month. 74.1% believe there will be “no change” in business development spending, up from 59.3% in June. 3.7% believe there will be a decrease in spending, up from none last month.

July 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket

“I am optimistic about the rising rate environment, specifically that it will bring margin back into our business which will be healthy for the industry long term. I am concerned about the volatile economy that we are.” — David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Small Ticket

“If the federal government will stop flooding the economy with money, inflation should subside and the economy will respond accordingly.” — James D. Jenks, CEO, Global Finance and Leasing Services, LLC

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