EF Industry Confidence Remains Steady in January at Pre-Pandemic Levels

January 21, 2021, 07:25 AM

Filed Under: Equipment Leasing & Finance Foundation

The Equipment Leasing & Finance Foundation (the Foundation) released the January 2021 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 59.6, unchanged from the December index and in line with pre-pandemic levels.

When asked about the outlook for the future, MCI-EFI survey respondent Michael Romanowski, President, Farm Credit Leasing, said, “As we enter a new year and a new administration, eyes will be on fiscal policy to get us through the final stretches of the pandemic. We expect business investment to increase once the path forward is clearer.”

January 2021 Survey Results

The overall MCI-EFI is 59.6, unchanged from the December index.

When asked to assess their business conditions over the next four months, 33.3 percent of executives responding said they believe business conditions will improve over the next four months, up from 27.6 percent in December. Also, 59.3 percent believe business conditions will remain the same over the next four months, a decrease from 62.1 percent the previous month; 7.4 percent believe business conditions will worsen, a decrease from 10.3 percent in December.
33.3 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, up from 27.6 percent in December; 59.3 percent believe demand will “remain the same” during the same four-month time period, an increase from 55.2 percent the previous month; and 7.4 percent believe demand will decline, down from 17.2 percent in December.
18.5 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 24.1 percent in December; 81.5 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 75.9 percent last month; and none expect “less” access to capital, unchanged from the previous month.
When asked, 25.9 percent of the executives report they expect to hire more employees over the next four months, down from 31 percent in December; 66.7 percent expect no change in headcount over the next four months, a decrease from 69 percent last month; and 7.4 percent expect to hire fewer employees, up from none in December.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. Also, 77.8 percent of the leadership evaluate the current U.S. economy as “fair,” up from 72.4 percent in December; 22.2 percent evaluate it as “poor,” down from 27.6 percent last month.
51.9 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 55.2 percent in December; 37 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 34.5 percent last month; and 11.1 percent believe economic conditions in the U.S. will worsen over the next six months, up from 10.3 percent the previous month.
In January 22.2 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 34.5 percent last month; 74.1 percent believe there will be “no change” in business development spending, an increase from 62.1 percent in December; and 3.7 percent believe there will be a decrease in spending, up slightly from 3.5 percent last month.

The COVID-19 Impact Survey of the Equipment Finance Industry, conducted monthly since its launch in May 2020 and released with the MCI-EFI, will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.