The Equipment Leasing & Finance Foundation (the Foundation) releases the April 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market fell to a historic low in April of 22.3, decreasing from the previous low of 46.0 in the March index.
When asked about the outlook for the future, MCI-EFI survey respondent Michael DiCecco, Executive Vice President, Huntington Asset Finance, said, “During these uncertain times, I remain optimistic about the future of the equipment leasing and finance industry. While production is likely to soften in the short term, in many ways we have a great opportunity to affirm our value to our existing clients and demonstrate our value to new ones. It’s an important time to stay close to our clients.”
April 2020 survey results
The overall MCI-EFI is 22.3, a decrease from 46.0 in March.
When asked to assess their business conditions over the next four months:
- 6.9% of executives responding said they believe business conditions will improve over the next four months, up from 3.7% in March.
- None believe business conditions will remain the same over the next four months, a decrease from 48.2% the previous month.
- 93.1% believe business conditions will worsen, an increase from 48.2% in March.
In terms of demand for leases and loans to fund capital expenditures:
- 6.9% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 3.7% in March.
- 3.5% believe demand will “remain the same” during the same four-month time period, a decrease from 59.3% the previous month.
- 89.7% believe demand will decline, an increase from 37% in March.
None of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 14.8% in March.
- 53.6% of executives indicate they expect the “same” access to capital to fund business, a decrease from 77.8% last month.
- 46.4% expect “less” access to capital, an increase from 7.4% the previous month.
When asked, 6.9% of the executives report they expect to hire more employees over the next four months, a decrease from 29.6% in March.
- 69% expect no change in headcount over the next four months, an increase from 66.7% last month.
- 24.1% expect to hire fewer employees, down from 3.7% the previous month.
None of the leadership evaluate the current U.S. economy as “excellent,” down from 18.5% the previous month. None of the leadership evaluate the current U.S. economy as “fair,” down from 77.8% in March. One-hundred percent evaluate it as “poor,” up from 3.7% last month.
When forecasting economic conditions:
- 27.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 14.8% in March.
- 6.9% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 37% last month.
- 65.5% believe economic conditions in the U.S. will worsen over the next six months, up from 48.2% the previous month.
In April, 17.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.2% last month.
- 48.3% believe there will be “no change” in business development spending, down from 70.4% in March.
- 34.5% believe there will be a decrease in spending, an increase from 7.4% last month.
