The Equipment Leasing & Finance Foundation (the Foundation) released the November 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 42.8, an increase from the October index of 40.1.

When asked about the outlook for the future, MCI-EFI survey respondent Sean Duffy, Chief Financial Officer of Global Financial & Leasing Services, LLC, said, “The depth of geopolitical uncertainty, and our own domestic political uncertainty, will have a significant impact on how the economy and our industry fare over the next 6-12 months.”

November 2023 Survey Results

The overall MCI-EFI is 42.8, an increase from the October index of 40.1.

• When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 3.7 percent in October. 74.1 percent believe business conditions will remain the same over the next four months, unchanged from the previous month. 25.9 percent believe business conditions will worsen, an increase from 22.2 percent in October.
• None of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, down from 3.7 percent in October. 74.1 percent believe demand will “remain the same” during the same four-month time period, a decrease from 77.8 percent the previous month. 25.9 percent believe demand will decline, an increase from 18.5 percent in October.
• 11.1 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 14.8 percent in October. 74.1 percent of executives indicate they expect the “same” access to capital to fund business, up from 70.4 percent last month. 14.8 percent expect “less” access to capital, unchanged from the previous month.
• When asked, 14.8 percent of the executives report they expect to hire more employees over the next four months, unchanged from October. 77.8 percent expect no change in headcount over the next four months, up from 70.4 percent last month. 7.4 percent expect to hire fewer employees, down from 14.8 percent in October.
• 3.7 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from none the previous month. 81.5 percent of the leadership evaluate the current U.S. economy as “fair,” down from 92.6 percent in October. 14.8 percent evaluate it as “poor,” up from 7.4 percent last month.
• 3.7 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, relatively unchanged from 3.9 percent in October. 44.4 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7 percent last month. 51.9 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 38.5 percent the previous month.
• In November, 14.8 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 11.1 percent the previous month. 70.4 percent believe there will be “no change” in business development spending, down from 77.8 percent in October. 14.8 percent believe there will be a decrease in spending, an increase from 11.1 percent last month.

November 2023 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket

“As the equipment leasing and finance industry heads to the end of year there will continue to be demand for financing, and the organizations with liquidity will have solid new originations. Portfolios continue to perform in most sectors at strong historic rates. I think we are heading into a slowdown in 2024, and rates will fall during this slowdown, but for now there is opportunity.” – David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Bank, Middle Ticket

“Customers seem to be getting accustomed to the current interest rate environment and the idea that rates may not be coming down for a while. This, combined with the continued draw-down of cash reserves, could lead to increased lease demand going forward, but we will need to keep a closer eye on repayment capacity.” – Jason Lueders, President, Farm Credit Leasing