The overall Equipment Lease Finance MCI-EFI is 58.7, up from the January index of 54.2, reflecting increased optimism.
The Equipment Leasing & Finance Foundation (the Foundation) released the February 2013 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 $725 billion equipment finance sector. Overall, confidence in the equipment finance market is up for the third consecutive month at 58.7, an increase from the January index of 54.2, reflecting industry participants’ increasing optimism despite a wary eye on economic conditions and government management of fiscal policies.
When asked about the outlook for the future, MCI survey respondent Anthony Cracchiolo, president and CEO, Vendor Services, U.S. Bank Equipment Finance, said, “The industry continues to look stable and positioned on solid footing for future growth. The replacement economy is well under way. However, expansion of the markets is still questionable. The next several months will tell the story for 2013 and answer the question of whether 2013 will see moderate or significant growth. In either case, the equipment finance industry will be on the leading edge of the overall economy.”
February 2013 Survey Results:
The overall MCI-EFI is 58.7, up from the January index of 54.2.
- When asked to assess their business conditions over the next four months, 20% of executives responding said they believe business conditions will improve over the next four months, up from 6.1% in January. 77.1% of respondents believe business conditions will remain the same over the next four months, down from 87.9% in January. 2.9% believe business conditions will worsen, down from 6.1% the previous month.
- 20% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 12.1% in January. 77.1% believe demand will “remain the same” during the same four-month time period, up from 75.8% the previous month. 2.9% believe demand will decline, down from 12.1% in January.
- 22.9% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.2% in January. 77.1% of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 85.3% the previous month. No one expects “less” access to capital, unchanged from January.
- When asked, 22.9% of the executives reported they expect to hire more employees over the next four months, down from 24.2% in January. 65.7% expect no change in headcount over the next four months, down from 69.7% last month. 11.4% expect fewer employees, up from 6.1% of respondents who expected fewer employees in January.
- 85.7% of the leadership evaluates the current U.S. economy as “fair,” down from 87.9% last month. 11.4% rate it as “poor,” down from 12.1% in January. One survey respondent rated the current economy as “excellent.”
- 22.9% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 6.1% in January. 74.3% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 84.8% in January. 2.9% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 9.1% who believed so last month.
- In February, 37.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.3% in January. 60% believe there will be “no change” in business development spending, down from 69.7% last month. 2.9% believe there will be a decrease in spending, up from no one who believed so last month.
Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.
Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence.
How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:
- Current business conditions
- Expected product demand over the next four months
- Access to capital over the next four months
- Future employment conditions
- Evaluation of the current U.S. economy
- U.S. economic conditions over the next six months
- Business development spending expectations
- Open-ended question for comment
How may I access the MCI-EFI?
Survey results are posted on the Foundation website, included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at this link.