Equipment Finance Market Confidence Increases in March

The Equipment Leasing & Finance Foundation (the Foundation) has released the March 2019 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 increased in March for the second consecutive month to 60.4, up from the February index of 56.7.

When asked about the outlook for the future, MCI-EFI survey respondent Harry Kaplun, president, Specialty Finance, Frost Bank, states, “This year will continue to be prosperous as economic indicators are predicting. Business growth is spurred by low interest rates, favorable tax rates and expansion oriented investment.”

March 2019 Survey Results:
The overall MCI-EFI is 60.4, an increase from 56.7 in February.  

•   When asked to assess their business conditions over the next four months, 20 percent of executives responding said they believe business conditions will improve over the next four months, up from 10 percent in February. Seventy percent of respondents believe business conditions will remain the same over the next four months, a decrease from 83.3 percent the previous month. Ten percent believe business conditions will worsen, up from 6.7 percent who believed so the previous month.

•   23.3 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 13.3 percent in February. Seventy percent believe demand will remain the same during the same four-month time period, a decrease from 83.3 percent the previous month. 6.7 percent believe demand will decline, up from 3.3 percent who believed so in February.

•   13.3 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 20.7 percent in February. 86.7 percent of executives indicate they expect the same access to capital to fund business, an increase from 79.3 percent last month. None expect less access to capital, unchanged from last month.

•   When asked, 46.7 percent of the executives report they expect to hire more employees over the next four months, an increase from 26.7 percent in February. 46.7 percent expect no change in headcount over the next four months, a decrease from 56.7 percent last month. 6.7 percent expect to hire fewer employees, down from 16.7 percent last month.

•   36.7 percent of the leadership evaluate the current U.S. economy as excellent, 63.3 percent of the leadership evaluate the current U.S. economy as fair, and none evaluate it as poor, all unchanged for the second consecutive month.

•   6.7 percent of the survey respondents believe that U.S. economic conditions will get better over the next six months, down from 13.3 percent in February. 80 percent of survey respondents indicate they believe the U.S. economy will stay the same over the next six months, an increase from 70 percent the previous month. 13.3 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 16.7 percent in February.

•   In March, 33.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 20 percent last month. 66.7 percent believe there will be no change in business development spending, a decrease from 80 percent in February. None believe there will be a decrease in spending, unchanged from last month.

March 2019 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Consolidation in the industry will continue to create opportunity. The overall application volume has remained stable,” states David Normandin, CLFP, president and CEO, Wintrust Specialty Finance.

Independent, Small Ticket
“I’m optimistic that companies in general have ample cash and access to capital to withstand any softening of demand. I’m concerned about the softening housing market and the negative impact it may have on small business sentiment,” says Quentin Cote, CLFP, president, Mintaka Financial LLC.

Bank, Middle Ticket
“Federal government concerns cast a shadow over economic optimism,” says Adam Warner, president, Key Equipment Finance.

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