Equipment Leasing & Finance Foundation

Fiscal Issues Influence Decline in Equipment Finance Confidence Index

The Equipment Leasing & Finance Foundation (the Foundation) released the December 2012 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 48.5, a decrease from the November index of 49.9, reflecting industry participants’ concerns regarding the impact of fiscal issues on capital expenditures, despite an overall sense of optimism in the equipment finance industry.

"Regardless of actions or no action by Congress to address the fiscal cliff and extension of the Bush tax cuts, the equipment finance industry will be proactive in offering creative, innovative and reliable products and structures to retain its market share of financing needs, and remain an integral part of available finance solutions to all customers," said survey respondent Russell Nelson, president of Farm Credit Leasing Services Corporation.

December 2012 survey results

Business conditions over the next four months:

  • 5.9% believe business conditions will improve, down from 9.1% in November
  • 73.5% believe business conditions will remain the same, up from 69.7% in November
  • 20.6% believe business conditions will worsen, down from 21.2% the previous month

Demand for leases and loans to fund capital expenditures over next four months:

  • 8.8% believe demand will increase, a decrease from 12.1% in November
  • 58.8% believe demand will “remain the same”, down from 63.6% the previous month
  • 32.4% believe demand will decline, up from 24.2% in November

Access to capital to fund equipment acquisitions over next four months:

  • 14.7% expect more access to capital, down from 21.2% in November
  • 85.3% expect the “same” access to capital, an increase from 72.7% the previous month
  • No one expects “less” access to capital, down from 6.1% in November

Hiring employees over next four months:

  • 23.5% expect to hire more employees, down from 33.3% in November
  • 64.7% expect no change in headcount, up from 54.5% last month
  • 11.8% expect fewer employees, down from 12.1% in November

Evaluation of current U.S. economy:

  • 76.5% evaluates the current U.S. economy as “fair,” down from 78.8% last month
  • 23.5% rate it as “poor,” up from 21.2% in November
  • 11.8% believe that U.S. economic conditions will get “better” over the next six months, up from 6.1% in November
  • 55.9% believe the U.S. economy will “stay the same”, down from 66.7% in November
  • 32.4% believe economic conditions will worsen, an increase from 27.3% who believed so last month

Spending:

  • 35.3% believe their company will increase spending on business development activities during the next six months, up from 27.3% in November
  • 58.8% believe there will be “no change” in business development spending, down from 63.6% last month
  • 5.9% believe there will be a decrease in spending, down from 9.1% who believed so last month

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