Equipment Finance Industry Confidence Reaches 2-Year High

January 27, 2014

The Equipment Leasing & Finance Foundation’s January Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) reported an overall confidence level of 64.9, the highest level in two years. This represents an increase from the December 2013 index of 55.8.

“We’re optimistic about 2014 as we come off of a very strong Q4. The recent federal budget deal is positive since it takes some uncertainty out of the market,” said David Schaefer, CEO of Mintaka Financial and a survey respondent. “Employment gains were also positive and this should bring more equipment demand and, therefore, financing opportunities. Margins are still being compressed as capital is abundant but demand remains fairly neutral.”

Thirty-three percent of respondents believe business conditions will improve over the next 12 months, up from 12 percent in December, while 61 percent believe conditions will remain the same and 5.6 percent believe they will worsen.

Thirty-six percent of respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, 61 percent believe demand will be unchanged, and 2.8 percent believe it will decline.

A quarter of respondents expect more access to capital to fund equipment acquisitions over the next four months. Seventy-five percent expect the same access to capital and no respondents expect less access to capital.

When asked, 33 percent of the executives reported they expect to hire more employees over the next four months, an increase from 27.3% in December, while 58.3 percent expect no change and 8.3 percent expect fewer employees.

Also in January, 2.8 percent of the leadership evaluates the current U.S. economy as “excellent,” down from 6 percent in December.  94.4 percent of the leadership evaluates the current U.S. economy as “fair,” up from 85 percent last month and 2.8 percent rate it as “poor,” down from 9 percent in December.

41.7 percent of survey respondents believe that U.S. economic conditions will get better over the next six months, while 55.6 percent believe the U.S. economy will stay the same.  2.6 percent believe economic conditions in the U.S. will worsen over the next six months.

In January, 55.6 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months.  Thirty-nine percent believe there will be no change in business development spending, and 5.6 percent believe there will be a decrease in spending.

For the full report, click here.