The Equipment Leasing & Finance Foundation releases the April 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. 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 $1 trillion equipment finance sector. Overall, confidence in the equipment finance market decreased in April after two consecutive months’ increases to 58.3, down from the March index of 60.4.
“Low unemployment continues to fuel consumer strength, and seems to be propelling the market forward," notes MCI-EFI survey respondent Quentin Cote, CLFP, president of Mintaka Financial, LLC. "I am concerned about the deficit and potential inflation, and their impact on interest rates.”
April 2019 Survey Results
The overall MCI-EFI is 58.3, a decrease from 60.4 in March.
• When asked to assess their business conditions over the next four months, 13.3 percent of executives responding said they believe business conditions will improve over the next four months, down from 20 percent in March. And 76.7 percent of respondents believe business conditions will remain the same over the next four months, an increase from 70 percent the previous month. Those who believe business conditions will worsen are at 10 percent, unchanged from the previous month.
• Only 13.3 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 23.3 percent in March. In the survey, 83.3 percent believe demand will “remain the same” during the same four-month time period, an increase from 70 percent the previous month. And 3.3 percent believe demand will decline, down from 6.7 percent who believed so in March.
• The findings show 6.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 13.3 percent in March. And 93.3 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 86.7 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 46.7 percent of the executives report they expect to hire more employees over the next four months, unchanged from March. Amd 40 percent expect no change in headcount over the next four months, a decrease from 46.7 percent last month, while 13.3 percent expect to hire fewer employees, up from 6.7 percent last month.
• On the business landscape now, 40 percent of the leadership evaluate the current U.S. economy as “excellent,” up from 36.7 percent in March. And 60 percent of the leadership evaluate the current U.S. economy as “fair,” a decrease from 63.3 percent the previous month. None evaluate it as “poor,” unchanged from March.
• Looking forward, 6.7 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from March. And 73.3 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 80 percent the previous month, while 20 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 13.3 percent in March.
• In April, 36.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 33.3 percent last month. And 63.3 percent believe there will be “no change” in business development spending, a decrease from 66.7 percent in March. None believe there will be a decrease in spending, unchanged from last month.
“Origination volume has continued to grow for Wintrust Specialty Finance and credit and portfolio quality remain high," says David Normandin, CLFP, president and CEO of Wintrust Specialty Finance. "Widening political divide is cause for concern both in perceptions that lead to confidence levels as well as potential regulatory changes.”
Dave B. Fate, President and CEO of Stonebriar Commercial Finance, sees more positives in the current political climate.
“I’m optimistic because the economy is still doing well, the Fed has taken a long pause on interest rates and unemployment is at its lowest ever," Fate notes. "Regulatory and tax reforms have had a positive impact on businesses and the U.S. economy.”