The Equipment Leasing & Finance Foundation released the October 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market is 51.4, a decrease from the September index of 54.7.

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 Valerie Hayes Jester, President, Brandywine Capital Associates, Inc., said, “We still see continued demand for certain classes of replacement equipment. Our customers who have any cross-border interests seem to be postponing acquisitions due to uncertainty with trade issues and tariffs. The recent events in Washington could provide some headwinds to a strong fourth quarter.”

October 2019 Survey Results

The overall MCI-EFI is 51.4, a decrease from 54.7 in September.  

• When asked to assess their business conditions over the next four months, 9.7 percent of executives responding said they believe business conditions will improve over the next four months, down from 10.3 percent in September; 71 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 75.9 percent the previous month; and 19.4 percent believe business conditions will worsen, up from 13.8 percent in September.

• 13.3 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, unchanged from September; 73.3 percent believe demand will “remain the same” during the same four-month time period, a decrease from 76.7 percent the previous month; 13.3 percent believe demand will decline, up from 10 percent in September.

• 16.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, unchanged from September; 80 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 83.3 percent last month; and 3.3 percent expect “less” access to capital, an increase from none in September.

• When asked, 16.1 percent of the executives report they expect to hire more employees over the next four months, a decrease from 30 percent in September; 71 percent expect no change in headcount over the next four months, an increase from 63.3 percent last month; and 12.9 percent expect to hire fewer employees, up from 6.7 percent the previous month.

• 19.4 percent of the leadership evaluate the current U.S. economy as “excellent,” and 80.7 percent of the leadership evaluate the current U.S. economy as “fair,” both relatively unchanged from the previous month. None evaluate it as “poor,” unchanged from last month.

• 3.2 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from September. In addition, 58.1 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 70 percent the previous month; 38.7 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 26.7 percent in September.

• In October, 25.8 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 26.7 percent last month; 71 percent believe there will be “no change” in business development spending, an increase from 70 percent in September; and 3.2 percent believe there will be a decrease in spending, unchanged from last month.

October 2019 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket
“Application volume remains strong with consistent approval rates. Portfolio performance remains strong and we are focused here given an uptick of delinquency by peers.” — David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Small Ticket
“I'm optimistic that the consumer remains healthy, with low unemployment and relatively low personal debt. I'm concerned that the trade wars are starting to have effect on the economy, starting with transportation.” — Quentin Cote, CLFP, President, Mintaka Financial, LLC

Bank, Middle Ticket
“We continue to see challenges in the agriculture industry. Until trade issues are resolved we do not expect a robust capital investment environment.” — Michael Romanowski, President, Farm Credit Leasing