The Equipment Leasing & Finance Foundation released the October 2018 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market eased in October to 63.2, down from the September index of 65.5.

Designed to collect leadership data, 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.

When asked about the outlook for the future, MCI-EFI survey respondent Harry Kaplun, President, Specialty Finance, Frost Bank, said, “Business optimism is apparent in all sectors, which leads to more capital spending. While there is some caution with large expansions, most companies are willing to spend on equipment to grow.” 

October 2018 Survey Results

The overall MCI-EFI is 63.2, a decrease from 65.5 in September. 

• When asked to assess their business conditions over the next four months, 18.5 percent of executives responding said they believe business conditions will improve over the next four months, an increase from 17.9 percent in September. Also, 81.5 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 82.1 percent the previous month. None believe business conditions will worsen, unchanged from the previous month.
• 25.9 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 35.7 percent in September. Also, 70.4 percent believe demand will “remain the same” during the same four-month time period, an increase from 64.3 percent the previous month; 3.7 percent believe demand will decline, up from none who believed so in September.
• 14.8 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 10.7 percent in September. In addition, 85.2 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 89.3 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 44.4 percent of the executives report they expect to hire more employees over the next four months, a decrease from 50 percent in September. Also, 48.2 percent expect no change in headcount over the next four months, a decrease from 50 percent last month; 7.4 percent expect to hire fewer employees, up from none last month.
• 51.9 percent of the leadership evaluate the current U.S. economy as “excellent,” 48.2 percent of the leadership evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” all unchanged from last month.
• 11.1 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from September. Also, 74.1 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 85.2 percent the previous month. And 14.8 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 3.7 percent in September.
• In October, 44.4 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 40.7 percent in September. Also, 55.6 percent believe there will be “no change” in business development spending, a decrease from 59.3 percent the previous month. None believe there will be a decrease in spending, unchanged from last month.

October 2018 MCI-EFI Survey Comments from Industry Executive Leadership

Independent, Small Ticket
“I'm optimistic because we are at full employment, and I believe small businesses will look to capital equipment to make their workers more efficient since hiring is more difficult. I'm concerned about political instability.” — Quentin Cote, CLFP, President, Mintaka Financial, LLC

Bank, Middle Ticket
“The fourth quarter will be a good barometer to how our customers are using tax reform to manage their tax positions. We expect that many customers will be advised by their tax advisors to increase their use of leasing resulting in an increase in year-end purchase leaseback activity.” — Michael Romanowski, President, Farm Credit Leasing Services Corporation

Bank, Middle Ticket
“A change in a congressional majority in the upcoming mid-terms will make decision making at the federal level go from frantic to inoperable.” — Adam Warner, President, Key Equipment Finance