Overall, confidence in the equipment finance market is 54.0, an easing from the March index of 58.0, reflecting industry participants’ continuing concerns over the economy and the impact of federal policies on capital expenditures.
The Equipment Leasing & Finance Foundation (the Foundation) released the April 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) April 19. 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 $725 billion equipment finance sector. Overall, confidence in the equipment finance market is 54.0, an easing from the March index of 58.0, reflecting industry participants’ continuing concerns over the economy and the impact of federal policies on capital expenditures.
When asked about the outlook for the future, MCI survey respondent Ron Arrington, president, CIT Global Vendor Finance said, “The effects of sequestration, tax increases and healthcare costs are causing companies to continue to hold back on investment in capex. That said, the equipment financing market is growing, albeit modestly, largely driven by enterprise consumption focusing on equipment life cycle management and productivity gains to reduce operating expense. If the second half of this year brings greater certainty on political and economic issues, companies are poised to increase their capex spending and this should bode well for the equipment financing industry.”
April 2013 Survey Results
The overall MCI-EFI is 54.0, a decrease from the March index of 58.0
• When asked to assess their business conditions over the next four months, 6.3 percent of executives responding said they believe business conditions will improve over the next four months, down from 21.9 percent in March. 84.4 percent of respondents believe business conditions will remain the same over the next four months, up from 71.9 percent in March. 9.4 percent believe business conditions will worsen, up from 6.3 percent the previous month.
• 12.5 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 21.9 percent in March. 75 percent believe demand will “remain the same” during the same four-month time period, up from 68.8 percent the previous month. 12.5 percent believe demand will decline, up from 9.4 percent in March.
• 18.8 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 28.1 percent in March. 81.3 percent of survey respondents indicate they expect the “same” access to capital to fund business, an increase from 68.8 percent the previous month. No one expects “less” access to capital, down from 3.1 percent of respondents in March.
• When asked, 25 percent of the executives reported they expect to hire more employees over the next four months, unchanged from March. 65.6 percent expect no change in headcount over the next four months, down from 71.9 percent last month. 9.4 percent expect fewer employees, up from 3.1 percent of respondents who expected fewer employees in March.
• 87.5 percent of the leadership evaluates the current U.S. economy as “fair,” up from 84.4 percent last month. 12.5 percent rate it as “poor,” unchanged from March.
• 15.6 percent of survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from March. 68.8 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 71.9 percent in March. 15.6 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 12.5 percent who believed so last month.
• In April, 31.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, unchanged from March. 68.8 percent believe there will be “no change” in business development spending, unchanged from last month. No one believes there will be a decrease in spending, also unchanged from March.
For more information, visit www.LeaseFoundation.org.