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Equipment Finance Market Softens: EFLA

Confidence in the equipment finance market eased this month, according to the Equipment Leasing & Finance Foundation October 2015 Monthly Confidence Index for the Equipment Finance Industry

October 21, 2015

Confidence in the equipment finance market eased this month, according to the Equipment Leasing & Finance Foundation October 2015 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 $903 billion equipment finance sector. Overall, confidence in the equipment finance market is 58.7, down from the September index of 61.1, following a sharp rise in the August index.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, Inc., said, “Demand is consistent but not what we would have expected coming into the fourth quarter. We see many of our small business customers delaying purchases or putting the equipment acquisition decision through more evaluation than we had seen in the last year. Margins are still under pressure given the amount of liquidity in the market. Portfolio performance continues to be strong.”

• When asked to assess their business conditions over the next four months, 14.8 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 22.2 percent in September. 77.8 percent of respondents believe business conditions will remain the same over the next four months, an increase from 70.4 percent in September. 7.4 percent believe business conditions will worsen, unchanged from the previous month.

• 22.2 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 29.6 percent in September. 70.4 percent believe demand will “remain the same” during the same four-month time period, up from 59.3 percent the previous month. 7.4 percent believe demand will decline, a decrease from 11.1 percent who believed so in September.

• 22.2 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 25.9 percent in September. 77.8 percent of survey respondents indicate they expect the “same” access to capital to fund business, up from 70.4 percent in September. None expect “less” access to capital, down from 3.7 percent the previous month.

• When asked, 40.7 percent of the executives report they expect to hire more employees over the next four months, an increase from 37.0 percent in September. 51.9 percent expect no change in headcount over the next four months, down from 59.3 percent last month. 7.4 percent expect to hire fewer employees, up from 3.7 percent in September.

• 3.7 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from none last month. 88.9 percent of the leadership evaluate the current U.S. economy as “fair,” down from 96.3 percent in September. 7.4 percent rate it as “poor,” an increase from 3.7 percent the previous month.

• 7.4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 18.5 percent who believed so in September. 77.8 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, up from 74.1 percent in September. 14.8 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 7.4 percent who believed so last month.

• In October, 40.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 51.9 percent in September. 59.3 percent believe there will be “no change” in business development spending, an increase from 44.4 percent last month. None believe there will be a decrease in spending, a decrease from 3.7 percent last month.

Source: EFLA

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