July 23 , 2014
Equipment finance industry confidence remains steady in July
U.S. – The Equipment Leasing & Finance Foundation has released the July 2014 ‘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 $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 61.4, unchanged from the June MCI-EFI.
When asked about the outlook for the future, MCI-EFI survey respondent Adam D. Warner, president, key equipment finance and chairman of the Equipment Leasing and Finance Association (ELFA), says, “I don't believe that the dramatic contraction of the U.S. economy in Q1 should be blamed on winter weather. There are underlying concerns by businesses and consumers that real unemployment has been too high for too long and not enough of the federal incentives are around job creation. Additionally, the federal government's inability to collaborate on growth initiatives is having a lasting toll on confidence.”
July 2014 Survey Results:
The overall MCI-EFI is 61.4, unchanged from the June index.
- When asked to assess their business conditions over the next four months, 28.6 per cent of executives responding said they believe business conditions will improve over the next four months, up from 23.5 per cent in June. 68.6 per cent of respondents believe business conditions will remain the same over the next four months, down from 70.6 per cent in June. 2.9 per cent believe business conditions will worsen, down from 5.9 per cent who believed so the previous month.
- 25.7 per cent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 17.6 per cent in June. 68.6 per cent believe demand will “remain the same” during the same four-month time period, down from 79.4 per cent the previous month. 5.7 per cent believe demand will decline, up from 2.9 per cent who believed so in June.
- 25.7 per cent of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 26.5 per cent in June. 74.3 per cent of survey respondents indicate they expect the “same” access to capital to fund business, an increase from 73.5 per cent in June. No one expects “less” access to capital, unchanged from the previous month.
- When asked, 37 per cent of the executives reported they expect to hire more employees over the next four months, a decrease from 44 per cent in June. 60 per cent expect no change in headcount over the next four months, up from 50 per cent last month. 2.9 per cent expect fewer employees, down from 5.9 per cent who expected fewer employees in June.
- 5.7 per cent of the leadership evaluates the current U.S. economy as “excellent,” up from 2.9 per cent last month. 88.6 per cent of the leadership evaluates the current U.S. economy as “fair,” a decrease from 91.4 per cent in June. 5.7 per cent rate it as “poor,” unchanged from the last three months.
- 22.9 per cent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 29.4 per cent who believed so in June. 74.3 per cent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 70.6 per cent in June. 2.9 per cent believe economic conditions in the U.S. will worsen over the next six months, up from none last month.
- In July, 25.7 per cent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 35.3 per cent in June. 74.3 per cent believe there will be “no change” in business development spending, an increase from 61.8 per cent last month. None believe there will be a decrease in spending, a decrease from 2.9 per cent who believed so last month.
July 2014 MCI-EFI Survey Comments from Industry Executive Leadership:
Independent, Small Ticket
“The industry continues to supply capital to the economy. We are approving a strong percentage of applicants and our yields continue to be challenged. My concern is that demand still does not seem to be where it should be for an economy that should be expanding at this point. This tepid demand continues to drive strong competition both on rate and credit window,” says Valerie Hayes Jester, president, Brandywine Capital Associates, Inc.
Bank, Small Ticket
“The economic climate remains cloudy. Investors have fewer places to go and invest. The tension in the Middle East and immigration issues are increasing and most likely will soften markets.” Says Kenneth Collins, chief executive officer, Susquehanna Commercial Finance, Inc.
Bank, Middle Ticket
“Economists generally point to a robust second half of 2014. If they’re right, the equipment finance market will have a strong second half. However, past predictions of a strong economic recovery have missed the mark. I am cautiously optimistic that predictions of a strong recovery beginning in the second half will finally ring true,” says Thomas Jaschik, president, BB&T Equipment Finance