The Equipment Leasing & Finance Foundation (the Foundation) released the December 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 42.5, steady with the November index of 42.8.

When asked about the outlook for the future, MCI-EFI survey respondent Dave B. Fate, CEO of Stonebriar Commercial Finance, said, “In the most recent survey, most opined that the markets would remain steady through early 2024 with very few signs anticipating dramatic changes in the next several months. Subsequent economic reports over the past two weeks, including the Fed’s announcement that further rate hikes are no longer forecasted, with various institutions predicting multiple rate cuts throughout 2024, the first of which some predict as early as March–have caused major positive shifts in sentiment in the bond and equity markets the past two weeks. Equity markets have rallied to all-time highs, mortgage rates dropped below 7 percent, and overall market sentiment has improved significantly, which I expect will continue in the coming months.”

December 2023 Survey Results

The overall MCI-EFI is 42.5, relatively unchanged from the November index of 42.8.

• When asked to assess their business conditions over the next four months, 3.7 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from none in November. 66.7 percent believe business conditions will remain the same over the next four months, down from 74.1 percent the previous month. 29.6 percent believe business conditions will worsen, an increase from 25.9 percent in November.
• 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, up from none in November. 74.1 percent believe demand will “remain the same” during the same four-month time period, unchanged from the previous month. 22.2 percent believe demand will decline, a decrease from 25.9 percent in November.
• 3.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 11.1 percent in November. 74.1 percent of executives indicate they expect the “same” access to capital to fund business, unchanged from last month. 22.2 percent expect “less” access to capital, up from 14.8 percent the previous month.
• When asked, 18.5 percent of the executives report they expect to hire more employees over the next four months, an increase from 14.8 percent in November. 63 percent expect no change in headcount over the next four months, down from 77.8 percent last month. 18.5 percent expect to hire fewer employees, up from 7.4 percent in November.
• None of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 3.7 percent the previous month. 85.2 percent of the leadership evaluate the current U.S. economy as “fair,” up from 81.5 percent in November. 14.8 percent evaluate it as “poor,” unchanged from last month.
• 3.7 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from November. 66.7 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 44.4 percent last month. 29.6 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 51.9 percent the previous month.
• In December, 14.8 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, unchanged from the previous month. 66.7 percent believe there will be “no change” in business development spending, down from 70.4 percent in November. 18.5 percent believe there will be a decrease in spending, an increase from 14.8 percent last month.

December 2023 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket

“Repeat business from existing customers remains strong. While other lenders have pulled back for various reasons, our program has remained consistent without major changes to credit requirements. However, we are seeing some of the fallout from increased equipment values that were a result of low inventory in 2020-2021.” – Charles Jones, Senior Vice President, 1st Equipment Finance (FNCB Bank)

Independent, Small Ticket

“Looking out to 2024, we expect sales of equipment and transportation to be softer.” – James D. Jenks, CEO, Global Finance and Leasing Services, LLC