The Equipment Leasing & Finance Foundation's May 2016 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) showed lenders' confidence in the equipment finance market slipped four points to 55.1 after increases in March and April.
Designed to collect leadership data, the index reports a qualitative assessment of both prevailing business conditions and expectations for the future reported by key executives from the $1 trillion equipment-finance sector.
Respondents to the MCI-EFI survey include a cross section of industry executives from banks, independents and captive equipment-finance companies. The MCI-EFI polls the same pool of 50 organization leaders monthly so the results constitute what the foundation calls "a consistent barometer of industry confidence."
When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, pesident, Brandywine Capital Associates Inc., said, “Application activity has been strong in the last 30 days, but I suspect that is pent-up demand from customers who delayed equipment purchases in the last quarter. Rates continue to be low and credit approvals are not a factor. It is more the reluctance of the small business owner to make expansion decisions given our current political environment that concerns me.”
May 2016 Survey Results
The overall MCI-EFI is 55.1, a decrease from the April index of 59.1.
- When asked to assess their business conditions over the next four months, 16.1% of executives responding said they believe business conditions will improve over the next four months, an increase from 12.1% in April. 67.7% of respondents believe business conditions will remain the same over the next four months, a decrease from 75.8% in April. 16.1% believe business conditions will worsen, an increase from 12.1% the previous month.
- 16.1% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 15.2% in April. 61.3% believe demand will “remain the same” during the same four-month time period, down from 66.7% the previous month. 22.6% believe demand will decline, an increase from 18.2% who believed so in April.
- 19.4% of executives expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 24.2% in April. 74.2% of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 75.8% the previous month. 6.5% expect “less” access to capital, an increase from none last month.
- When asked, 48.4% of the executives report they expect to hire more employees over the next four months, a decrease from 51.5% in April. 48.4% expect no change in headcount over the next four months, an increase from 45.5% last month. 3.2% expect to hire fewer employees, relatively unchanged from April.
- None of the leadership evaluates the current U.S. economy as “excellent,” a decrease from 3.0% last month. 96.8% of the leadership evaluate the current U.S. economy as “fair,” relatively unchanged from April. 3.2% rate it as “poor,” an increase from none the previous month.
- 6.5% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.0% who believed so in April. 64.5% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 87.9% the previous month. 29.0% believe economic conditions in the U.S. will worsen over the next six months, an increase from 9.1% who believed so last month.
- In May, 38.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 54.5% in April. 58.1% believe there will be “no change” in business development spending, an increase from 45.5% the previous month. 3.2% believe there will be a decrease in spending, an increase from none who believed so last month.