Equipment Leasing and Finance Industry confidence higher in November
Overall, confidence in the equipment finance market is 67.0 in November, an increase from 63.7 in October.
The Equipment Leasing & Finance Foundation recently released the November 2017 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, 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 trillion equipment finance sector.
When asked about the outlook for the future, MCI-EFI survey respondent Thomas Jaschik, president, BB&T Equipment Finance, said: “The House is considering its tax reform package which includes a reduction in the corporate tax rate to 20 percent. The assumption is that this will allow companies to invest more fully in their businesses. If this holds true, the tax package would be the catalyst to accelerate growth in our industry. Over the next several years the equipment finance industry could achieve record levels of new business production.”
November 2017 survey results:
The overall MCI-EFI is 67.0 in November, up from 63.7 in October. When asked to assess their business conditions over the next four months, 32.4% of executives responding said they believe business conditions will improve over the next four months, a decrease from 40% in October; 67.7% of respondents believe business conditions will remain the same over the next four months, an increase from 60% in October; and none believe business conditions will worsen, unchanged from the previous month.
CAPEX prediction
35.3% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 36.7% in October. 64.7% believe demand will “remain the same” during the same four-month time period, up from 60% the previous month. None believe demand will decline, a decrease from 3.3% who believed so in October.
Capital for equipment acquisitions
29.4% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 20% in October. 67.7% of executives indicate they expect the “same” access to capital to fund business, down from 80% last month. None expect “less” access to capital, unchanged from last month.
Employment outlook
When asked, 35.5% of the executives report they expect to hire more employees over the next four months, an increase from 33.3% in October. 61.8% expect no change in headcount over the next four months, a decrease from 63.3% last month. 2.9% expect to hire fewer employees, a decrease from 3.3% in October.
Overall economy
17.7% of the leadership evaluate the current U.S. economy as excellent, up from none last month. 82.4% of the leadership evaluate the current U.S. economy as “fair,” a decrease from 100% in October. None evaluate it as “poor,” unchanged from last month.
32.5% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 23.3% in October. 64.7% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 76.7% the previous month. 2.9% believe economic conditions in the U.S. will worsen over the next six months, an increase from none who believed so in October.
Business development plans
In November, 52.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 36.7% in October. 47.1% believe there will be “no change” in business development spending, a decrease from 63.3% the previous month. None believe there will be a decrease in spending, unchanged from last month.
November 2017 MCI-EFI Survey comments from industry executive leadership:
Independent, Small Ticket: “We continue to see a steady flow of good quality transactions. Our average customer is still concerned with the lack of direction on tax issues and healthcare reform. Until there is clarity, we don't expect to see a large volume of business expansion projects. There’s just too much unknown to fund transactions with leverage.” -- Valerie Hayes Jester, President, Brandywine Capital Associates
Bank, Small Ticket: “I am concerned about the ongoing lack of results from Washington and the effects that this will have on the confidence of the business community over time.” -- David Normandin, CLFP, Managing Director, Commercial Finance Group, Hanmi Bank
Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.
Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence.
Access the MCI-EFI
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.
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