Equipment Finance Industry Confidence Reaches New Three-Year High

December 19, 2024, 07:10 AM

Filed Under: Equipment Leasing & Finance Foundation

Related: Confidence, ELFF, Equipment Leasing & Finance Foundation

The Equipment Leasing & Finance Foundation (the Foundation) releases the December 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 68.8, surpassing the November index of 67.5, the previous three-year high. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1.3 trillion equipment finance sector.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, CLFP, President and Chief Executive Officer, Wintrust Specialty Finance, said, “Over the last year, the equipment finance industry has witnessed changes in liquidity, volatile swap rates, higher delinquency, and credit charges returning to a more normalized state. Through this, we have adapted and created better solutions to meet our customers’ needs. Now that the election is over and the Fed has begun cutting rates, I think there is more surety for businesses to confidently invest in their business. This will create good opportunities for the equipment finance industry in 2025.”

December 2024 Survey Results:

The overall MCI-EFI is 68.8, up from the November index of 67.5.

Business conditions - When asked to assess their business conditions over the next four months, 57.1% of the executives responding said they believe business conditions will improve over the next four months, an increase from 43.3% in November. 32.1% believe business conditions will remain the same over the next four months, down from 50% the previous month. 10.7% believe business conditions will worsen, up from 6.7% in November.

Capex demand – 53.6% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 48.3% in November. 42.9% believe demand will “remain the same” during the same four-month time period, down from 44.8% the previous month. 3.6% believe demand will decline, a decrease from 6.9% in November.

Access to capital – 28.6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 37.9% in November. 71.4% of executives indicate they expect the “same” access to capital to fund business, up from 62.1% last month. None expect “less” access to capital, unchanged from the previous month.

Employment - When asked, 46.4% of the executives report they expect to hire more employees over the next four months, an increase from 44.8% in November. 42.9% expect no change in headcount over the next four months, down from 48.3% last month. 10.7% expect to hire fewer employees, up from 6.9% in November.

U.S. economy – 7.1% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 89.3% evaluate the economy as “fair,” down from 96.7% in November. 3.6% evaluate it as “poor,” relatively unchanged from 3.3% last month.

Economic outlook – 53.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 60% in November. 35.7% indicate they believe the U.S. economy will “stay the same” over the next six months, down from 36.7% last month. 10.7% believe economic conditions in the U.S. will worsen over the next six months, an increase from 3.3% the previous month.

Business development spending – In December, 46.4% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 36.7% the previous month. 50% believe there will be “no change” in business development spending, a decrease from 56.7% in November. 3.6% believe there will be a decrease in spending, down from 6.7% last month.

“Economic resilience and growth, the continued adoption of technology and digitization, and government infrastructure initiatives are increasing demand. The new administration may slow the shift toward sustainability and the equipment requirements needed.” said Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America.

“Political changes at the federal level are encouraging to small business. Changes to green energy policy and federal oversight [Section 1071] could lead to a more robust environment.” added Charles Jones, Senior Vice President, 1st Equipment Finance.