The Equipment Leasing & Finance Foundation released the latest edition of its measure of industry confidence levels, showing a strengthening outlook for February. The February 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) registered a 56.7, up from the January number of 53.4.
The MCI-EFI surveys executives in the equipment finance sector, soliciting their opinions on current business conditions and asking them to suss out the road ahead.
In the survey, 36.7 percent of respondents assess the current state of the U.S. economy as “excellent” and 63.3 percent say it is “fair.” None of those surveyed tagged the economy as “poor.” All of those numbers remain steady from the previous month, and the vast majority of the business leaders suggest the stasis will continue well into 2019. In a significant increase from January, 83.3 percent of respondents feel business conditions will remain the same for the next four month, against 10 percent who believe the environment will improve and 6.7 percent who predict it will get worse. In the previous survey, 20 percent believed business would deteriorate.
“Within the U.S. the positive trends continue,” offers Harry Kaplan, president of specialty finance at Frost Bank, in his response to the survey. “GDP and workforce growth along with a reasonably low cost of money are just some of the positive indicators.”
The February survey suggests hiring is softening a bit, as 26.7 percent of respondents indicate plans to hire more employees in the coming months. In January, a third of the executives expected some payroll expansion.
Some of the respondents noted weariness with the ways in which political jockeying has brought added unpredictability into their business plans. For now, a certain amount of avoidance is potentially taking hold as a strategy.
“Our optimism in the economy requires putting a blind eye to the current political climate with the hope that sensible minds will prevail; we are seeing a demand in most industry sectors and geographic regions that we serve,” Frank Campagna, business line manager with M&T Commercial Equipment Finance. “Clients, especially in the transportation sector, are turning over equipment more frequently and are returning to using tax lease structures more than in the recent past. Clients are also more interested in discussing financing alternatives and engaging in the planning process with us early, which indicates a willingness and need to spend on capex.”