A new report shows confidence in the equipment finance market is lower in November than it was in October, reflecting many industry participants' post-election concerns including the fiscal cliff, economic policy, and taxes.
According to the Equipment Leasing & Finance Foundation's Monthly Confidence Index for the Equipment Finance Industry, overall confidence in the market is 49.9, down from 53.3 last month.
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 $628 billion equipment finance sector.
When asked about the outlook for the future, MCI survey respondent Thomas Jaschik, President, BB&T Equipment Finance, says “The business community is waiting for positive signals from Washington before making additional investments. Investments in capital equipment and equipment financing will remain stagnant until such time.”
November 2012 Survey Results:
• When asked to assess their business conditions over the next four months, 9.1% of executives responding say they believe business conditions will improve over the next four months, up from 8.6% in October. 69.7% of respondents believe business conditions will remain the same over the next four months, down from 74.3% in October. 21.2% believe business conditions will worsen, up from 17.1% the previous month.
• A little more than 12% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 20% in October. Nearly two-thirds believe demand will “remain the same” during the same four-month time period, up from 57.1% the previous month. Moe than 24% believe demand will decline, up from 22.9% in October.
• More than a fifth of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 20% in October. Just less than three-quarters of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 80% the previous month. More than 6% expect “less” access to capital, up from no one who expected less access to capital in October.
• When asked, 33.3% of the executives reported they expect to hire more employees over the next four months, down from 34.3% in October; however, 54.5% expect no change in headcount over the next four months, down from 57.1% last month. More than 12% expect fewer employees, up from 8.6% of respondents who expected fewer employees in October.
• Nearly 80% of the leadership evaluates the current U.S. economy as “fair,” up from 65.7% last month, while 21.2% rate it as “poor,” down from 34.3% in October.
• More than 6% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 8.6% in October. Two-thirds of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 77.1% in October. The number of respondents who believe economic conditions in the United States will worsen over the next six months nearly doubled from 14.3% in October, to 27.3% now.
• In November, 27.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37.1% in October. Just under two-thirds believe there will be “no change” in business development spending, up from 62.9% last month, and 9.1% believe there will be a decrease in spending, up from no one who believed so last month.
For more information on the results, visit the Foundation's website.