Equipment Finance Industry Confidence Decreases Again in May
Posted: May 19, 2023 | Tradewinds
The Equipment Leasing & Finance Foundation (the Foundation) released the May 2023 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 40.6, a decrease from the April index of 47.0.
When asked about the outlook for the future, MCI-EFI survey respondent James D. Jenks, CEO, Global Finance and Leasing Services, LLC, said, “Until we get back to energy independence, I don't see an uptick in the economy in the foreseeable future.”
May 2023 Survey Results:
The overall MCI-EFI is 40.6, a decrease from the April index of 47.0.
When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 11.1% in April. 51.9% believe business conditions will remain the same over the next four months, down from 70.4% the previous month. 48.2% believe business conditions will worsen, an increase from 18.5 % in April.
3.6% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, unchanged from April. 53.6% believe demand will “remain the same” during the same four-month time period, a decrease from 70.4% the previous month. 42.9% believe demand will decline, up from 25.9% in April.
10.7% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 7.4% in April. 75% of executives indicate they expect the “same” access to capital to fund business, a decrease from 77.8% last month. 14.3% expect “less” access to capital, down from 14.8% the previous month.
When asked, 17.9% of the executives report they expect to hire more employees over the next four months, a decrease from 33.3% in April. 67.9% expect no change in headcount over the next four months, an increase from 51.9% last month. 14.3% expect to hire fewer employees, down from 14.8% in April.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 85.7% of the leadership evaluate the current U.S. economy as “fair,” down from 88.9% from April. 14.3% evaluate it as “poor,” an increase from 11.1% last month.
3.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 7.4% in April. 32.1% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 48.2% last month. 64.3% believe economic conditions in the U.S. will worsen over the next six months, an increase from 44.4% the previous month.
In May 35.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37% the previous month. 53.6% believe there will be “no change” in business development spending, up from 44.4% in April. 10.7% believe there will be a decrease in spending, down from 18.5% last month.
ABOUT THE MCI
Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment, and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.
Who participates in the MCI-EFI?
The respondents are comprised of a wide cross-section of industry executives, including large-ticket, middle-market and small-ticket banks, independents, and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence.
ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.