The Equipment Leasing & Finance Foundation released the May 2017 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 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. Overall, confidence in the equipment finance market eased again in May to 63.2, down from the April index of 65.8.
When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates, said, “Stronger demand has returned to our marketplace. I think the waiting game played by many small businesses in the first quarter has ended and demand is flowing more freely again. The changes to healthcare legislation may slow this down a bit, but I am optimistic that the year will end well.”
May 2017 survey results are as follows:
- The overall MCI-EFI is 63.2, a decrease from the April index of 65.8.
- When asked to assess their business conditions over the next four months, 22.6% of executives responding said they believe business conditions will improve over the next four months, a decrease from 36.7% in April. 71% of respondents believe business conditions will remain the same over the next four months, an increase from 63.3% in April. 6.5% believe business conditions will worsen — an increase from none the previous month.
- 38.7% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 40% in April. 54.8% believe demand will “remain the same” during the same four-month time period, down from 56.7% the previous month. 6.5% believe demand will decline, up from 3.3% who believed so in April.
- 12.9% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.7% in April. 83.9% of executives indicate they expect the “same” access to capital to fund business, up from 80% last month. 3.2% expect “less” access to capital, unchanged from last month.
- When asked, 45.2% of the executives report they expect to hire more employees over the next four months, an increase from 40% in April. 51.6% expect no change in headcount over the next four months, a decrease from 53.3% last month. 3.2% expect to hire fewer employees, down from 6.7% in April.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. 100% of the leadership evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” both also unchanged from April.
- 41.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 46.7% in April. 51.6% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 53.3% the previous month. 6.5% believe economic conditions in the U.S. will worsen over the next six months, up from none who believed so last month.
- In May, 45.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 46.7% in April. 51.6% believe there will be “no change” in business development spending, a decrease from 53.3% the previous month. 3.2% believe there will be a decrease in spending, up from none last month.
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.