September 22, 2014
Equipment finance industry confidence up
U.S.--The Equipment Leasing & Finance Foundation (the Foundation) has released the September 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 60.2, an increase from the August index of 58.9.
When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates, Inc., says, “We are experiencing stronger demand than in the past several months, which bodes well for a strong fourth quarter. There is still concern for yield erosion, but we look forward to concluding the year on a positive trend.”
September 2014 Survey Results:
The overall MCI-EFI is 60.2, an increase from the August index of 58.9.
- When asked to assess their business conditions over the next four months, 36.4 per cent of executives responding said they believe business conditions will improve over the next four months, up from 18.2 per cent in August; 60.6 per cent of respondents believe business conditions will remain the same over the next four months, down from 78.8 per cent in August. Three per cent believe business conditions will worsen, unchanged from the previous month.
- 30.3 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 21.2 per cent in August; 66.7 per cent believe demand will “remain the same” during the same four-month time period, down from 75.8 per cent the previous month. Three per cent believe demand will decline, unchanged from August.
- 15.2 per cent of executives expect more access to capital to fund equipment acquisitions over the next four months, unchanged from August; 84.8 per cent of survey respondents indicate they expect the “same” access to capital to fund business, and none expects “less” access to capital, both also unchanged from the previous month.
- When asked, 30.3 per cent of the executives reported they expect to hire more employees over the next four months, a decrease from 33.3 per cent in August; 60.6 per cent expect no change in headcount over the next four months, up from 57.6 per cent last month; 9.1 per cent expect fewer employees, unchanged from August.
- 6.1 per cent of the leadership evaluates the current U.S. economy as “excellent,” unchanged from last month; 87.9 per cent of the leadership evaluates the current U.S. economy as “fair,” and 6.1 per cent rate it as “poor,” both also unchanged from August.
- 27.3 per cent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 30.3 per cent who believed so in August; 66.7 per cent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, unchanged from August; 6.1 per cent believe economic conditions in the U.S. will worsen over the next six months, up from 3 per cent who believed so last month.
- In September, 15.2 per cent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 21.2 per cent in August; 84.8 per cent believe there will be “no change” in business development spending, an increase from 78.8 per cent last month. None believe there will be a decrease in spending, unchanged from last month.
September 2014 MCI-EFI Survey Comments from Industry Executive Leadership:
Captive, Small Ticket
“Equipment replacement and cloud financing should drive demand. The regulatory environment will increase burdens on lending/leasing activities.” Anthony Pacchiano, vice-president and general manager, ADP Commercial Leasing
Bank, Small Ticket
“While the consumer and commercial sectors are still suffering a hangover from the great recession, even after five years, the aversion to debt will slowly succumb to the need to upgrade and replace equipment.” Paul Menzel, president and chief executive officer, Financial Pacific Leasing
Bank, Middle Ticket
“As we approach the fourth quarter I am hopeful an improving economy collides with our typical seasonal upswing in new business activity. If this occurs our industry will finish the year with very strong results and a positive outlook for 2015.” Thomas Jaschik, president, BB&T Equipment Finance
Bank, Middle Ticket
“Businesses are beginning to invest in new equipment to increase capacity, not just to replace aging equipment. For the past two years the majority of purchases were replacement, not expansion. The recovery continues to be slow.” Elaine Temple, president, BancorpSouth Equipment Finance.