The Equipment Leasing & Finance Foundation released the August 2018 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market eased again in August to 60.7, down from the July index of 62.8.

When asked about the outlook for the future, MCI-EFI survey respondent Paul Menzel, CLFP, President and CEO, Financial Pacific Leasing, Inc., an Umpqua Bank Company, said, "Uncertainty" is the theme in the economy for the balance of 2018. Between the Administration's trade strategy, the mid-term elections, and the President's political challenges, decision-makers are taking a wait-and-see approach to business investment.” 

August 2018 Survey Results
The overall MCI-EFI is 60.7, a decrease from 62.8 in July. 

• When asked to assess their business conditions over the next four months, 13.3 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 19.4 percent in July. Eighty percent of respondents believe business conditions will remain the same over the next four months, an increase from 77.4 percent the previous month. And 6.7 percent believe business conditions will worsen, an increase from 3.2 percent who believed so the previous month.
• 16.7 percent of survey respondents believe demand for leases and loans to fund capital expenditures (CapEx) will increase over the next four months, a decrease from 19.4 percent in July. Also, 83.3 percent believe demand will “remain the same” during the same four-month time period, an increase from 77.4 percent the previous month. None believe demand will decline, down from 3.2 percent who believed so in July.
• 16.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 16.1 percent in July. Also, 83.3 percent of executives indicate they expect the “same” access to capital to fund business, a slight decrease from 83.9 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 36.7 percent of the executives report they expect to hire more employees over the next four months, a decrease from 45.2 percent in July. Also, 63.3 percent expect no change in headcount over the next four months, an increase from 51.6 percent last month. None expect to hire fewer employees, a decrease from 3.2 percent in July.40 percent of the leadership evaluate the current U.S. economy as “excellent,” down from 41.9 percent last month. Also, 60 percent of the leadership evaluate the current U.S. economy as “fair,” up from 58.1 percent in July. None evaluate it as “poor,” unchanged from last month.
• 13.3 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a slight increase from 12.9 percent in July. Also, 73.3 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 77.4 percent the previous month. Also, 13.3 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 9.7 percent in July.
• In August, 33.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 45.2 percent in July; 66.7 percent believe there will be “no change” in business development spending, an increase from 54.8 percent the previous month. None believe there will be a decrease in spending, unchanged from last month.

Survey Comments from Industry Executive Leadership

Independent, Small Ticket
“I think there remains pent-up demand for capital equipment, and strong economic activity bodes well for portfolio performance. My concerns are about the impact of trade wars on equipment manufacturers’ prices, and the politicization of Fed interest rate moves, which would lead to overheating and inflation.”—Quentin Cote, CLFP, President, Mintaka Financial, LLC

Independent, Small Ticket
“Our application rate and quality have remained steady over the typically slower summer months signaling a strong fourth quarter. Interest rates continue to be attractive even after earlier rate hikes. Businesses continue to expand at a strong rate and equipment finance continues to be a substantial component of that trend.”—Valerie Hayes Jester, President, Brandywine Capital Associates

Bank, Middle Ticket
“Trade tariffs are having an impact on capital investment by customers. Some are continuing to move forward, others are delaying investment. Overall, we are seeing business activity slightly behind levels from a year ago.”—Michael Romanowski, President, Farm Credit Leasing Services Corporation