Equipment Leasing and Finance Industry Confidence Increases Again in March

Confidence in the equipment finance market increased in March for the second consecutive month to 60.4, up from the February index of 56.7, according to the Equipment Leasing & Finance Foundation’s March 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of 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 Harry Kaplun, President, Specialty Finance, Frost Bank, said, “This year will continue to be prosperous as economic indicators are predicting. Business growth is spurred by low interest rates, favorable tax rates and expansion-oriented investment.”

“I'm optimistic that companies in general have ample cash and access to capital to withstand any softening of demand,” Quentin Cote, CLFP, President, Mintaka Financial, LLC indicated. However, he added, “I'm concerned about the softening housing market and the negative impact it may have on small business sentiment.”

March 2019 Survey Results

The overall MCI-EFI is 60.4, an increase from 56.7 in February. Following are key survey findings:

• When asked to assess their business conditions over the next four months, 20% of executives responding said they believe business conditions will improve, up from 10% in February. Seventy percent of respondents believe business conditions will remain the same over the next four months, a decrease from 83.3% the previous month. Ten percent believe business conditions will worsen, up from 6.7% who believed so the previous month.
• Nearly a quarter of survey respondents (23.3%) believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 13.3% in February. Seventy percent believe demand will “remain the same” during the same four-month time period, a decrease from 83.3% the previous month. While only 6.7% believe demand will decline, this is up from 3.3% who believed so in February.
• Just over 13% of respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 20.7% in February. A growing percentage (86.7%) of executives indicate they expect the “same” access to capital to fund business, an increase from 79.3% last month. None expect “less” access to capital, unchanged from last month.
• When asked, 46.7% of executives report they expect to hire more employees over the next four months, an increase from 26.7% in February. Another 46.7% expect no change in headcount over the next four months, a decrease from 56.7% last month, and 6.7% expect to hire fewer employees, down from 16.7% last month.
• In evaluating the current U.S. economy, 36.7% of the leadership view it as “excellent,” 63.3% evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” all unchanged for the second consecutive month.
• Survey respondents believing that U.S. economic conditions will get “better” over the next six months dropped to 6.7%, down from 13.3% in February. Eighty percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 70% the previous month, and 13.3% believe economic conditions will worsen, a decrease from 16.7% in February.
• In March, 33.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 20% last month. A total of 66.7% believe there will be “no change” in business development spending, a decrease from 80% in February. None believe there will be a decrease in spending, unchanged from last month.