Equipment Leasing and Finance Industry Confidence Eases But Steady

February 13, 2020, 07:30 AM

Filed Under: Equipment Leasing & Finance Foundation

The Equipment Leasing & Finance Foundation released the February 2020 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market in February is 58.7, easing but steady with the January index of 59.9.

When asked about the outlook for the future, MCI-EFI survey respondent Adam Warner, President, Key Equipment Finance, said, “Thankfully, the economy seems to have ignored the political wrangling in Washington. We are hopeful, both personally and professionally, that the coronavirus can be effectively managed globally.”

February 2020 Survey Results

The overall MCI-EFI is 58.7, a decrease from 59.9 in January.

When asked to assess their business conditions over the next four months, 11.5 percent of executives responding said they believe business conditions will improve over the next four months, down from 14.8 percent in January. 84.6 percent of respondents believe business conditions will remain the same over the next four months, an increase from 81.5 percent the previous month. 3.9 percent believe business conditions will worsen, unchanged in January.
7.7 percent 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 11.1 percent in January. 88.5 percent believe demand will “remain the same” during the same four-month time period, an increase from 85.2 percent the previous month. 3.9 percent believe demand will decline, unchanged from January.
19.2 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, an increase from 11.1 percent in January. 76.9 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 85.2 percent last month. 3.9 percent expect “less” access to capital, unchanged from the previous month.
When asked, 30.8 percent of the executives report they expect to hire more employees over the next four months, a decrease from 33.3 percent in January. 61.5 percent expect no change in headcount over the next four months, a decrease from 63 percent last month. 7.7 percent expect to hire fewer employees, up from 3.7 percent the previous month.
38.5 percent of the leadership evaluate the current U.S. economy as “excellent,” up from 37 percent the previous month. 61.5 percent of the leadership evaluate the current U.S. economy as “fair,” down from 63 percent in January. None evaluate it as “poor,” unchanged from last month.
4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 13.3 in January. 88 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 80 percent last month. 8 percent believe economic conditions in the U.S. will worsen over the next six months, up from 6.7 percent the previous month.
In February, 50 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 48.2 percent last month. 42.3 percent believe there will be “no change” in business development spending, a decrease from 48.2 percent in January. 7.7 percent believe there will be a decrease in spending, an increase from 3.7 percent last month.

February 2020 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket
“Continued strong origination volume, approval rates and portfolio performance all support an optimistic view of near-term strong performance.” — David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Small Ticket
“I'm optimistic because the overall economy is doing well. I'm concerned about decreases in capital expenditures, the shipping recession, and the uncertainty caused by the upcoming election.” — Quentin Cote, CLFP, President, Mintaka Financial, LLC

Bank, Middle Ticket
“Low commodity and trade tariff headwinds continue to mute large capital investment. We are seeing activity with replacement assets and solar, which we expect to continue throughout the year.” — Michael Romanowski, President, Farm Credit Leasing