The Equipment Leasing & Finance Foundation released the June 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market was 52.8, easing from the May index of 59.2.

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 Quentin Cote, CLFP, President, Mintaka Financial, LLC, said, “As unemployment is at record lows and employees are hard to come by, companies will rely more on capital equipment to support business growth and productivity growth from the employees they have. My concern is primarily the trade wars, and their impact on the prices of goods. This will eventually weaken the purchasing power of consumers and small businesses.”

June 2019 Survey Results

The overall MCI-EFI is 52.8, a decrease from 59.2 in May.  

• When asked to assess their business conditions over the next four months, 3.3 percent of executives responding said they believe business conditions will improve over the next four months, down from 16.1 percent in May. Also, 80 percent of respondents believe business conditions will remain the same over the next four months, an increase from 67.7 percent the previous month. And 16.7 percent believe business conditions will worsen, an increase from 16.1 percent in May.
• None of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, a decrease from 16.1 percent in May. Also, 83.3 percent believe demand will “remain the same” during the same four-month time period, an increase from 77.4 percent the previous month; 16.7 percent believe demand will decline, up from 6.5 percent who believed so in May.
• 13.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 12.9 percent in May; 86.7 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 87.1 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 30 percent of the executives report they expect to hire more employees over the next four months, a decrease from 41.9 percent in May. Also, 63.3 percent expect no change in headcount over the next four months, an increase from 45.2 percent last month; 6.7 percent expect to hire fewer employees, down from 12.9 percent last month.
• 40 percent of the leadership evaluate the current U.S. economy as “excellent,” down from 51.6 percent in May; 56.7 percent of the leadership evaluate the current U.S. economy as “fair,” an increase from 48.4 percent the previous month; and 3.3 percent evaluate it as “poor,” up from none in May.
• 3.3 percent of the survey respondents believe U.S. economic conditions will get “better” over the next six months, down from 9.7 percent in May; 70 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 77.4 percent the previous month. Further, 26.7 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 12.9 percent in May.
• In June, 26.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 35.5 percent last month. In addition, 73.3 percent believe there will be “no change” in business development spending, an increase from 64.5 percent in May. None believe there will be a decrease in spending, unchanged from last month.

June 2019 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket
“We are optimistic about earning share of wallet in this very competitive environment while we project that the economy will remain strong and capital investment will continue at solid levels. The polarized political climate will continue and we believe will not have a material effect on the economy.” — David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“Lack of progress on trade tariffs is beginning to spook the market. Customers are only buying what they need to replace and are hesitant to expand.” — Michael Romanowski, President, Farm Credit Leasing

“Increased economic tensions caused by an uncertain political climate are concerns.” — Frank Campagna, Business Line Manager, M&T Commercial Equipment Finance