Equipment Finance Industry Confidence Ticks Up in June

June 22, 2023, 07:23 AM

Filed Under: Equipment Leasing & Finance Foundation

Related: Charles Jones, David Normandin, Jonathan Albin, MCI-EFI, Monthly Confidence Index for the Equipment Finance Industry

The Equipment Leasing & Finance Foundation (the Foundation) released the June 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 44.1, an increase from the May index of 40.6.

When asked about the outlook for the future, MCI-EFI survey respondent Jonathan Albin, Chief Operating Officer, Nexseer Capital, said, “We believe that as banks’ senior credit facility lending tightens, there will be more opportunity for equipment lessors to supply supplemental capital. We are seeing evidence of this today.”

June 2023 Survey Results

The overall MCI-EFI is 44.1, an increase from the May index of 40.6.

When asked to assess their business conditions over the next four months, 3.3 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from none in May. 73.3 percent believe business conditions will remain the same over the next four months, up from 51.9 percent the previous month. 23.3 percent believe business conditions will worsen, a decrease from 48.2 percent in May.
6.7 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, an increase from 3.6 percent in May. 66.7 percent believe demand will “remain the same” during the same four-month period, an increase from 53.6 percent the previous month. 26.7 percent believe demand will decline, down from 42.9 percent in May.
6.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 10.7 percent in May. 76.7 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 75 percent last month. 16.7 percent expect “less” access to capital, up from 14.3 percent the previous month.
When asked, 13.3 percent of the executives report they expect to hire more employees over the next four months, a decrease from 17.9 percent in May. 76.7 percent expect no change in headcount over the next four months, an increase from 67.9 percent last month. 10 percent expect to hire fewer employees, down from 14.3 percent in May.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 83.3 percent of the leadership evaluate the current U.S. economy as “fair,” down from 85.7 percent in May. 16.7 percent evaluate it as “poor,” an increase from 14.3 percent last month.
6.7 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 May. 40 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 32.1 percent last month. 53.3 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 64.3 percent the previous month.
In June 30 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 35.7 percent the previous month. 56.7 percent believe there will be “no change” in business development spending, up from 53.6 percent in May. 13.3 percent believe there will be a decrease in spending, up from 10.7 percent last month.

June 2023 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket

“The equipment leasing and finance industry is resilient and will weather the liquidity shortage that we are currently in, as well as the looming recession. There are and will continue to be opportunities that exist in this environment, and nimble organizations that are capitalized will be well positioned to grow during this period of uncertainty.” – David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Bank, Middle Ticket

“Businesses need equipment to operate. While business expansion may be limited, the need to replace equipment will remain. Our credit criteria has not changed.” – Charles Jones, Senior Vice President, 1st Equipment Finance (FNCB Bank)