Equipment Leasing and Finance Industry Confidence Levels Near Two-Year High
Washington, DC — The Equipment Leasing & Finance Foundation (the Foundation) releases the February 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. 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 $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.3, the second highest index in two years and off slightly from last month’s two-year index high of 64.9.
When asked about the outlook for the future, MCI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, Inc., said, “I am optimistic that there is increasing demand for equipment and therefore financing to acquire that equipment. The brutal winter experienced by a significant portion of this country has slowed down many projects that would have been in progress by now. I am hoping that the last third of this quarter will show the signs we had experienced at year end, as demand increased.”
February 2014 Survey Results:
The overall MCI-EFI is 63.3, a decrease from the January index of 64.9.
- When asked to assess their business conditions over the next four months, 21.2 percent of executives responding said they believe business conditions will improve over the next four months, down from 33 percent in January. 72.7 percent of respondents believe business conditions will remain the same over the next four months, up from 61 percent in January. 6.1 percent believe business conditions will worsen, up from 5.6 percent who believed so the previous month.
- 24.2 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 36 percent in January. 69.7 percent believe demand will “remain the same” during the same four-month time period, up from 61 percent the previous month. 6.1 percent believe demand will decline, up from 2.8 percent who believed so in January.
- 31.3 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 25 percent in January. 65.6 percent of survey respondents indicate they expect the “same” access to capital to fund business, down from 75 percent in January. 3.1 percent expect “less” access to capital, up from no one who expected less access the previous month.
- When asked, 40.6 percent of the executives reported they expect to hire more employees over the next four months, an increase from 33 percent in January. 53 percent expect no change in headcount over the next four months, down from 58.3 percent last month. 6.3 percent expect fewer employees, down from 8.3 percent who expected fewer employees in January.
- 3 percent of the leadership evaluates the current U.S. economy as “excellent,” relatively unchanged from 2.8 percent last month. 93.8 percent of the leadership evaluates the current U.S. economy as “fair,” down slightly from 94.4 percent last month. 3 percent rate it as “poor,” also relatively unchanged from last month.
- 34.4 percent of the of survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 41.7 percent who believed so in January. 59.4 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 55.6 percent in January. 6.2 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 2.6 percent last month.
- In February, 56.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 55.6 percent in January. 43.8 percent believe there will be “no change” in business development spending, an increase from 39 percent last month. No one believes there will be a decrease in spending, a decrease from 5.6 percent who believed so last month.
February 2014 MCI Survey Comments from Industry Executive Leadership:
Bank, Small Ticket
“Weather has created some slow down in equipment deliveries and inventory which may slow first quarter growth.” Kenneth Collins, CEO, Susquehanna Commercial Finance, Inc.
Independent, Middle Ticket
“I’m conflicted about the near-term. All small to medium-size customers claim activity is sporadic and are not willing to commit capital for new equipment. Thus we see demand is off, but funding availability is strong.” George Booth, Managing Director, Black Rock Capital, LLC
Bank, Middle Ticket
“The economy and the equipment finance market continue to experience peaks and valleys. The good news is the valleys aren't getting any deeper; the bad news is the peaks aren’t getting any higher. Hopefully, in 2014 the economy will gain enough confidence to break through the peaks.” Thomas Jaschik, President, BB&T Equipment Finance
About the Foundation
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research. Funded through charitable individual and corporate donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. In 2014, the Foundation celebrates its 25th anniversary. Visit the Foundation online at http://www.LeaseFoundation.org