The Equipment Leasing & Finance Foundation (the Foundation) has released the September 2018 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 $1 trillion equipment finance sector. Overall, confidence in the equipment finance market rose in September to 65.5, up from the August index of 60.7.
When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, CLFP, managing director, Commercial Finance Group, Hanmi Bank, says, “The summer of 2018 has been brisk with activity and funded volume has been strong. Continued economic confidence and indicators lead me to believe that this will continue in the short term, thus I am optimistic about the remainder of 2018 and the start of 2019.”
September 2018 Survey Results
The overall MCI-EFI is 65.5; an increase from 60.7 in August.
- When asked to assess their business conditions over the next four months, 17.9 percent of executives responding said they believe business conditions will improve over the next four months; an increase from 13.3 percent in August. 82.1 percent of respondents believe business conditions will remain the same over the next four months; an increase from 80 percent from the previous month. None believe business conditions will worsen; a decrease from 6.7 percent who believed so the previous month.
- 35.7 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months; an increase from 16.7 percent in August. 64.3 percent believe demand will remain the same during the same four-month time period; a decrease from 83.3 percent the previous month. None believe demand will decline; unchanged from August.
- 10.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months; down from 16.7 percent in August. 89.3 percent of executives indicate they expect the same access to capital to fund business; an increase from 83.3 percent last month. None expect less access to capital; unchanged from last month.
- When asked, 50 percent of the executives report they expect to hire more employees over the next four months; an increase from 36.7 percent in August. 50 percent expect no change in headcount over the next four months; a decrease from 63.3 percent last month. None expect to hire fewer employees; unchanged from last month.
- 51.9 percent of the leadership evaluate the current U.S. economy as excellent; up from 40 percent last month. 48.2 percent of the leadership evaluate the current U.S. economy as fair; down from 60 percent in August. None evaluate it as poor; unchanged from last month.
- 11.1 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months; a decrease from 13.3 percent in August. 85.2 percent of survey respondents indicate they believe the U.S. economy will stay the same over the next six months; an increase from 73.3 percent the previous month. 3.7 percent believe economic conditions in the U.S. will worsen over the next six months; a decrease from 13.3 percent in August.
- In September, 40.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months; an increase from 33.3 percent in August. 59.3 percent believe there will be no change in business development spending; a decrease from 66.7 percent the previous month. None believe there will be a decrease in spending; unchanged from last month.
September 2018 MCI-EFI Survey Comments from Industry Executive Leadership
Independent, Small Ticket
“I’m optimistic about overall economic activity. The trade wars don’t seem to be curbing small business capital purchases,” states Quentin Cote, CLFP, president, Mintaka Financial LLC.
Bank, Middle Ticket
“As we enter into the last part of the year, we expect large projects to close out and to see an increase in solar opportunities as companies look to take advantage of the 30 percent solar tax credit in 2019,” says Michael Romanowski, president, Farm Credit Leasing Services Corp.
Captive, Middle Ticket
“I am optimistic because tax reform and deregulation are stimulating the economy. Rising rates, lease accounting rules and tariffs concern me,” says James Cress, vice president and general manager, Stryker Flex Financial.