The Equipment Leasing & Finance Foundation (the Foundation) released the January 2024 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 48.6, an increase from the December index of 42.5.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “I expect that Wintrust will have a good year in the market as we have stable liquidity, attractive cost of funds, and an engaged and motivated team. I expect to continue to see challenges in the overall economy as well as specific segments, and we are diversified and nimble to move to the opportunity. The leasing industry has historically performed better than other asset classes through tougher times because of the nimble and creative nature of the industry. I expect that the industry will come through this next couple years stronger having learned from our experiences.”

January 2024 Survey Results

The overall MCI-EFI is 48.6, an increase from the December index of 42.5.

• When asked to assess their business conditions over the next four months, 20.7 percent of the executives responding said they believe business conditions will improve over the next four months, an increase from 3.7 percent in December. 62.1 percent believe business conditions will remain the same over the next four months, down from 66.7 percent the previous month. 17.2 percent believe business conditions will worsen, a decrease from 29.6 percent in December.
• 13.8 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 3.7 percent in December. 65.5 percent believe demand will “remain the same” during the same four-month time period, down from 74.1 percent the previous month. 20.7 percent believe demand will decline, a decrease from 22.2 percent in December.
• 13.8 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 3.7 percent in December. 75.9 percent of executives indicate they expect the “same” access to capital to fund business, up from 74.1 percent last month. 10.3 percent expect “less” access to capital, down from 22.2 percent the previous month.
• When asked, 6.9 percent of the executives report they expect to hire more employees over the next four months, a decrease from 18.5 percent in December. 79.3 percent expect no change in headcount over the next four months, up from 63 percent last month. 13.8 percent expect to hire fewer employees, down from 18.5 percent in December.
• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 93.1 percent of the leadership evaluate the current U.S. economy as “fair,” up from 85.2 percent in December. 6.9 percent evaluate it as “poor,” down from 14.8 percent last month.
• 13.8 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 3.7 percent in December. 65.5 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 66.7 percent last month. 20.7 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 29.6 percent the previous month.
• In January, 17.2 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 14.8 percent the previous month. 65.5 percent believe there will be “no change” in business development spending, down from 66.7 percent in December. 17.2 percent believe there will be a decrease in spending, down from 18.5 percent last month.

January 2024 MCI-EFI Survey Comment from Industry Executive Leadership

Captive, Small Ticket

“We still see demand for light and medium-duty trucks to satisfy ever-growing e-commerce business. We also see thousands of light and medium-duty trucks waiting for bodies to be upfitted. When the body companies catch up with chassis awaiting upfitting, we will see a lot of opportunities for equipment finance companies in this sector over the next three to six months.” – Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc.