Equipment lease finance industry confidence decreases slightly at year-end.
The Equipment Leasing & Finance Foundation released the December 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 $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 55.8, a decrease from the November index of 56.9, reflecting industry concerns over uncertainty regarding capital expenditures (capex) and competitive market pressures in 2014, among other issues.
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 overall environment continues to be driven by uncertainty. The equipment finance industry is stable with low single digit growth. The industry is well positioned to address increasing demand when the economy improves evidenced by a higher GDP growth rate. There are no indicators currently that suggest stronger growth in the near term."
December 2013 Survey Results:
The overall MCI-EFI is 55.8, a decrease from the November index of 56.9.
- When asked to assess their business conditions over the next four months, 12% of executives responding said they believe business conditions will improve over the next four months, down from 17.2% in November. Seventy-eight point eight percent of respondents believe business conditions will remain the same over the next four months, down from 79.3% in November. Nine percent believe business conditions will worsen, up from 3.4% who believed so the previous month.
- Fifteen point two percent of survey respondents believe demand for leases and loans to fund capex will increase over the next four months, up from 13.8% in November. Seventy-eight point eight percent believe demand will “remain the same” during the same four-month time period, up from 75.9% the previous month. Nine percent believe demand will decline, down from 10.3% who believed so in November.
- Twenty-four percent of executives expect more access to capital to fund equipment acquisitions over the next four months, unchanged from November. Seventy-five point eight percent of survey respondents indicate they expect the “same” access to capital to fund business, up from 72.4% in November. No one expects “less” access to capital, down from 3.4% who expected less access in November.
- When asked, 27.3% of the executives reported they expect to hire more employees over the next four months, unchanged from November. Sixty point six percent expect no change in headcount over the next four months, down from 65.5% last month. Twelve percent expect fewer employees, up from 6.9% who expected fewer employees in November.
- Six percent of the leadership evaluates the current U.S. economy as “excellent,” unchanged from last month. Eight-five percent of the leadership evaluates the current U.S. economy as “fair,” up from 76% last month. Nine percent rate it as “poor,” down from 17% in November.
- Twenty-four point two percent of the of survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 17.2% who believed so in November. Sixty-six point seven percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 72.4% in November. Nine percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 10.3% last month.
- In December, 30.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 34.5% in November. Sixty-six point seven percent believe there will be “no change” in business development spending, an increase from 65.5% last month. Three percent believe there will be a decrease in spending, an increase from no one who believed so last month.
Source: Equipment Leasing & Finance Foundation