Confidence Dips in Equipment Leasing Indicator: ELFA

April 19, 2013

The April Monthly Confidence Index for the Equipment Finance Industry dropped to 54 from 58 in March, according to the Equipment Leasing and Finance Association. Respondents continue to be concerned about the economy and the impact of federal policies on capital expenditures, ELFA said.

“The effects of sequestration, tax increases and healthcare costs are causing companies to continue to hold back on investment in capex,” said respondent Ron Arrington, president of CIT Global Vendor Finance. “That said, the equipment financing market is growing, albeit modestly, largely driven by enterprise consumption focusing on equipment life cycle management and productivity gains to reduce operating expense. If the second half of this year brings greater certainty on political and economic issues, companies are poised to increase their capex spending and this should bode well for the equipment financing industry.”

The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $725 billion equipment finance sector.

Other findings:

  • 6.3 percent said they believe business conditions will improve over the next four months, down from 21.9 percent in March.
  • 12.5 percent believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 21.9 percent in March.
  • 18.8 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 28.1 percent in March.
  • 25 percent expect to hire more employees over the next four months, unchanged from March.
  • 87.5 percent evaluates the current U.S. economy as “fair."
  • 15.6 percent believe that U.S. economic conditions will get “better” over the next six months, unchanged from March.