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Finance Industry Confidence Drops in August: ELFF

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September MCI.

Confidence in the equipment finance market dropped in August, as measured by the Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), to 60.5. In July, the index was 66.6.

The Equipment Leasing & Finance Foundation produces the index, which is a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector.

What’s ahead for equipment finance?

When asked to assess their business conditions over the next four months, 17.9 percent of executives responding said they believe business conditions will improve over the next four months, down from 35.7 percent in August. Seven in 10 (71.4 percent) said business conditions will remain the same over the next four months, up from 64.3 percent the previous month. About 10 percent said they believe business conditions will worsen, up from none in August.

One in five (21.4 percent) respondents said demand for leases and loans to fund capital expenditures will increase over the next four months, down from 32.1 percent in August. Three-quarters said demand will “remain the same” during the same four-month time period, an increase from 67.9 percent the previous month.

Some 7.1 percent of respondents evaluate the current U.S. economy as “excellent,” a decrease from 14.3 percent the previous month. Nine of 10 (92.9 percent) evaluate the current U.S. economy as “fair,” up from 85.7 percent. None evaluate it as “poor,” unchanged from last month.

Some 17.9 percent of respondents said that U.S. economic conditions will get “better” over the next six months, a decrease from 32.1 percent in August. A bit over six of 10 (64.3 percent) said the U.S. economy will “stay the same” over the next six months, unchanged from last month. And 17.9 percent believe economic conditions in the U.S. will worsen over the next six months, up from 3.6 percent the previous month.

When asked about the outlook for the future, respondent Bruce J. Winter, president of FSG Capital, said, “The delta variant is causing some slowdown in certain sectors which will delay, but not derail the recovery of these industries. Other sectors that have seen strong demand but were unable to fulfill all orders due to severe labor shortages are optimistic more workers will return now that the federal unemployment bonus has expired. We expect a robust fourth quarter and are optimistic the momentum will continue into early next year. Future inflation remains the great unknown, and the outcome of the proposed $3.5 trillion infrastructure bill will be a key determinate in whether we experience only short-term inflation or several years of inflation well above the Fed’s target rate.”

Source: ELFF

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