Equipment Lease Finance Industry Confidence Improves In May

When asked to assess their business conditions over the next four months, 9.7 percent of executives responding said they believe business conditions will improve over the next four months, up from 6.3 percent in April. 87.1 percent of respondents believe business conditions will remain the same over the next four months, up from 84.4 percent in April.

Washington, DC, May 21, 2013 — The Equipment Leasing & Finance Foundation (the Foundation) releases the May 2013 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 $725 billion equipment finance sector. Overall, confidence in the equipment finance market is 56.7, an increase from the April index of 54.0, reflecting industry participants’ increasing optimism despite continuing concerns over the economy and the impact of federal policies on capital expenditures.

When asked about the outlook for the future, MCI survey respondent Aylin Cankardes, President, Rockwell Financial Group, said, “With strong liquidity in the market we are seeing lending extended to middle market credits again. Lessees continue to renew leases but for shorter periods of time as they are now becoming more interested in financing capital equipment to replace existing assets,”

May 2013 Survey Results:

The overall MCI-EFI is 56.7.0, an increase from the April index of 54.0.

  • When asked to assess their business conditions over the next four months, 9.7 percent of executives responding said they believe business conditions will improve over the next four months, up from 6.3 percent in April. 87.1 percent of respondents believe business conditions will remain the same over the next four months, up from 84.4 percent in April. 3.2 percent believe business conditions will worsen, down from 9.4 percent the previous month.
  • 12.9 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, relatively unchanged from 12.5 percent in April. 80.6 percent believe demand will “remain the same” during the same four-month time period, up from 75 percent the previous month. 6.5 percent believe demand will decline, down from 12.5 percent in April.
  • 25.8 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.8 percent in April. 74.2 percent of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 81.3 percent the previous month. No one expects “less” access to capital, unchanged from April.
  • When asked, 19.4 percent of the executives reported they expect to hire more employees over the next four months, a decrease from 25 percent in April. 71 percent expect no change in headcount over the next four months, up from 65.6 percent last month. 9.7 percent expect fewer employees, relatively unchanged from 9.4 percent of respondents who expected fewer employees in April.
  • 90.3 percent of the leadership evaluates the current U.S. economy as “fair,” up from 87.5 percent last month. 9.7 percent rate it as “poor,” a decrease from 12.5 percent in April.
  • 32.3 percent of survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 15.6 percent in April. 64.5 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 68.8 percent in April. 3.2 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 15.6 percent who believed so last month.
  • In April, 25.8 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 31.3 percent in April. 74.2 percent believe there will be “no change” in business development spending, an increase from 68.8 percent last month. No one believes there will be a decrease in spending, unchanged from April.

May 2013 MCI Survey Comments from Industry Executive Leadership:

Depending on the market segment they represent, executives have differing points of view on the current and future outlook for the industry.

Independent, Small Ticket

“The industry continues to provide capital to fuel economic expansion. We continue to think that the upswing in parts of the consumer economy will begin to impact the small businesses that have been reluctant to borrow for equipment needs.” Valerie Hayes Jester, President, Brandywine Capital Associates, Inc.

Bank, Middle Ticket

“Continuation of low interest rates, and recent strength in the financial markets, housing and manufacturing sectors are encouraging increased capex and general optimism about the U.S. economy by individual customers and corporate CFOs. Growth potential for the industry throughout the remainder of 2013 should exceed earlier forecasts and could carryover to 2014.” Russell Nelson, President, CoBank Farm Credit Leasing

Bank, Middle Ticket

“The demand for equipment financing continues to be hampered by the lack of any substantial initiative on the part of the U.S. Congress and Executive branch to provide clarity to U.S. fiscal and tax policies. As long as this lack of initiative continues the hesitation by U.S. companies to invest in capital assets will continue.” Thomas Jaschik, President, BB&T Equipment Finance


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.

How may I access the MCI-EFI?

Survey results are posted on the Foundation website, http://www.leasefoundation.org/IndRsrcs/MCI/, included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

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. Primarily funded through donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. Visit the Foundation online at www.LeaseFoundation.org and follow us on Twitter @LeaseFoundation.

 

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