The Equipment Leasing & Finance Foundation (the Foundation) released the April 2023 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 $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 47.0, a decrease from the March index of 50.3.

When asked about the outlook for the future, MCI-EFI survey respondent Jonathan Albin, Chief Operating Officer, Nexseer Capital, said, “I believe current market conditions present opportunities for our industry. Businesses have to react to the risk of tightening credit markets. As a result, they will be more open to exploring alternatives and supplements to their senior lending facilities to finance CAPEX and source liquidity, and that will lead to opportunities for lessors.”

April 2023 Survey Results

The overall MCI-EFI is 47.0, a decrease from the March index of 50.3.

• When asked to assess their business conditions over the next four months, 11.1 percent of the executives responding said they believe business conditions will improve over the next four months, a slight increase from 10.7 percent in March. 70.4 percent believe business conditions will remain the same over the next four months, up from 57.1 percent the previous month. 18.5 percent believe business conditions will worsen, a decrease from 32.1 percent in March.
• 3.7 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 10.7 percent in March. 70.4 percent believe demand will “remain the same” during the same four-month period, an increase from 67.9 percent the previous month. 25.9 percent believe demand will decline, up from 21.4 percent in March.
• 7.4 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 17.9 percent in March. 77.8 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 71.4 percent last month. 14.8 percent expect “less” access to capital, up from 10.7 percent the previous month.
• When asked, 33.3 percent of the executives report they expect to hire more employees over the next four months, a decrease from 35.7 percent in March. 51.9 percent expect no change in headcount over the next four months, a decrease from 57.1 percent last month. 14.8 percent expect to hire fewer employees, up from 7.1 percent in March.
• None of the leadership evaluate the current U.S. economy as “excellent,” down from 3.7 percent the previous month. 88.9 percent of the leadership evaluate the current U.S. economy as “fair,” unchanged from March. 11.1 percent evaluate it as “poor,” an increase from 7.4 percent last month.
• 7.4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.6 percent in March. 48.2 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 53.6 percent last month. 44.4 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 42.9 percent the previous month.
• In April, 37.0 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 39.3 percent the previous month. 44.4 percent believe there will be “no change” in business development spending, down from 53.6 percent in March. 18.5 percent believe there will be a decrease in spending, up from 7.1 percent last month.

April 2023 MCI-EFI Survey Comment from Industry Executive Leadership

Bank, Small Ticket

“I think the general economy will have a downturn this year which is why we are focused on credit quality and portfolio performance. In this market change, opportunity exists and I am optimistic that Wintrust Specialty Finance is well-positioned to step up to those opportunities.” – David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Bank, Middle Ticket

“KeyBank clients continue to have the confidence in Key to meet their needs from a cash management and lending perspective. While the economy has slowed, demand remains for financing important infrastructure and clean energy initiatives. We remain encouraged that as we move along 2023, Key Equipment Finance will continue to support capital equipment acquisitions, technology efficiency investments and, ultimately, a rebound in most of our sectors.” –  Adam Warner, President, Key Equipment Finance