The Equipment Leasing & Finance Foundation's June 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) 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. Confidence in the equipment finance market increased to 45.8, up from the May index of 25.8.
The Foundation also released highlights of the COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry. From 98 survey responses collected from June 1 to 11, results show that 92% of equipment finance companies have offered payment deferrals. 82% of companies expect that the default rate will be greater in 2020 than in 2019. A majority (81%) of companies have not furloughed or laid off employees. Additional survey results are available at https://www.leasefoundation.org/industry-resources/covid-impact-survey/.
When asked about the outlook for the future, MCI-EFI survey respondent Daniel Krajewski, President and CEO, Sertant Capital, LLC, says, “Despite the reduction in overall demand, the market size still remains extensive. We continue to find opportunity and have seen an uptick in application activity. We do have continued concern over the political environment and the divide that continues to exist in Washington.”
June 2020 Survey Results:
The overall MCI-EFI is 45.8, an increase from 25.8 in May.
- When asked to assess their business conditions over the next four months, 37% of executives responding said they believe business conditions will improve over the next four months, up from 3.3% in May. 18.5% believe business conditions will remain the same over the next four months, an increase from 10% the previous month. 44.4% believe business conditions will worsen, a decrease from 86.7% in May.
- 18.5% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 6.7% in May. 44.4% believe demand will “remain the same” during the same four-month time period, an increase from 6.7% the previous month. 37% believe demand will decline, a decrease from 86.7% in May.
- 7.4% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from none in May. 85.2% of executives indicate they expect the “same” access to capital to fund business, an increase from 73.3% last month. 7.4% expect “less” access to capital, a decrease from 26.7% the previous month.
- When asked, 7.4% of the executives report they expect to hire more employees over the next four months, a decrease from 16.7% in May. 85.2% expect no change in headcount over the next four months, an increase from 60% last month. 7.4% expect to hire fewer employees, down from 23.3% the previous month.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 22.2% of the leadership evaluate the current U.S. economy as “fair,” up from 10% in May. 77.8% evaluate it as “poor,” down from 90% last month.
- 55.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 20% in May. 25.9% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 30% last month. 18.5% believe economic conditions in the U.S. will worsen over the next six months, down from 50% the previous month.
- In June, 14.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 23.3% last month. 74.1% believe there will be “no change” in business development spending, up from 33.3% in May. 11.1% believe there will be a decrease in spending, a decrease from 43.3% last month.