The Equipment Leasing & Finance Foundation has released the December 2018 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 $1 trillion equipment finance sector. Overall, confidence in the equipment finance market eased again in December to 55.5, a decrease from the November index of 58.5.
When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates, said, “We are experiencing a strong close to the year. Many of our customers are expanding their businesses and therefore investing in equipment for the long term. 2019 is looking a bit unstable at the moment. The manic stock market coupled with uncertain tariff and trade policies seem to be indicating economic instability for the coming year. The sector of the industry we service really mirrors consumer sentiment. The last 30 days have shown that the drivers to that market may be losing momentum.”
December 2018 Survey Results:
The overall MCI-EFI is 55.5, a decrease from 58.5 in November.
- When asked to assess their business conditions over the next four months, 13.8 percent of executives responding said they believe business conditions will improve over the next four months, an increase from 10.7 percent in November. 65.5 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 78.6 percent the previous month. 20.7 percent believe business conditions will worsen, an increase from 10.7 percent who believed so the previous month.
- 3.5 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 7.1 percent in November. 79.3 percent believe demand will “remain the same” during the same four-month time period, a decrease from 82.1 percent the previous month. 17.2 percent believe demand will decline, up from 10.7 percent who believed so in November.
- 17.2 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.3 percent in November. 75.9 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 85.7 percent last month. 6.9 percent expect “less” access to capital, up from none last month.
- When asked, 44.8 percent of the executives report they expect to hire more employees over the next four months, an increase from 42.9 percent in November. 44.8 percent expect no change in headcount over the next four months, a decrease from 46.4 percent last month. 10.3 percent expect to hire fewer employees, down slightly from 10.7 percent last month.
- 41.4 percent of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 57.1 percent in November. 58.6 percent of the leadership evaluate the current U.S. economy as “fair,” an increase from 42.9 percent last month. None evaluate it as “poor,” unchanged from last month.
- 10.7 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.6 percent in November. 53.6 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 78.6 percent the previous month. 35.7 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 17.9 percent in November.
- In December, 42.9 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, 57.1 percent believe there will be “no change” in business development spending, and none believe there will be a decrease in spending, all unchanged from last month.
Survey 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.
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:
1. Current business conditions
2. Expected product demand over the next four months
3. Access to capital over the next four months
4. Future employment conditions
5. Evaluation of the current U.S. economy
6. U.S. economic conditions over the next six months
7. Business development spending expectations
8. Open-ended question for comment
Full survey can be found on the Foundation website, The Equipment Leasing & Finance Foundation. Survey respondent demographics and additional information about the MCI are also available at the link above.
