The Equipment Leasing & Finance Foundation released the November 2018 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market eased further in November to 58.5, a decrease from the October index of 63.2.

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 Valerie Hayes Jester, President, Brandywine Capital Associates, said, “The conclusion of the midterm elections will hopefully bring a renewed focus to completion of transactions for the quarter at hand. The recent stock market gyrations usually have an impact on the confidence of the small business customer. We will see how that translates to business for 2019.”    

November 2018 Survey Results

The overall MCI-EFI is 58.5, a decrease from 63.2 in October. 

• When asked to assess their business conditions over the next four months, 10.7 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 18.5 percent in October. In addition, 78.6 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 81.5 percent the previous month; 10.7 percent believe business conditions will worsen, an increase from none who believed so the previous month.
• 7.1 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 25.9 percent in October; 82.1 percent believe demand will “remain the same” during the same four-month time period, an increase from 70.4 percent the previous month; and 10.7 percent believe demand will decline, up from 3.7 percent who believed so in October.
• 14.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down slightly from 14.8 percent in October; 85.7 percent of executives indicate they expect the “same” access to capital to fund business, a slight increase from 85.2 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 42.9 percent of the executives report they expect to hire more employees over the next four months, a decrease from 44.4 percent in October; 46.4 percent expect no change in headcount over the next four months, a decrease from 48.2 percent last month; and 10.7 percent expect to hire fewer employees, up from 7.4 percent last month.
• 57.1 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from 51.9 percent in October; 42.9 percent of the leadership evaluate the current U.S. economy as “fair,” a decrease from 48.2 percent last month. None evaluate it as “poor,” unchanged from last month.
• 3.6 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 11.1 percent in October. And 78.6 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 74.1 percent the previous month; 17.9 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 14.8 percent in October.
• In November, 42.9 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 44.4 percent in October; 57 percent believe there will be “no change” in business development spending, an increase from 55.6 percent the previous month. None believe there will be a decrease in spending, unchanged from last month.

November 2018 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket
“Demand in small ticket and middle market has softened, which is compressing margins from increased, year-end competition. I believe the political climate has created business uncertainty which leads to postponed capex.” — Paul Menzel, CLFP, President and CEO, Financial Pacific Leasing, Inc., an Umpqua Bank Company

Bank, Middle Ticket
“The equipment finance industry is experiencing the broad U.S. market expansion for capital equipment. This is generating growth in activity across most, if not all, equipment and customer segments.” — Anthony Cracchiolo, President and CEO, U.S. Equipment Finance

Bank, Middle Ticket
“I expect the traditional year-end jump in new business volume to continue for 2018 given the continual upswing in capital expenditures.” — Thomas Jaschik, President, BB&T