The Equipment Leasing & Finance Foundation (the Foundation) released the March 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) March 21. 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 58.0, a slight decrease from the February index of 58.7, reflecting a leveling off in industry participants’ optimism after two consecutive increases.
When asked about the outlook for the future, MCI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates Inc., said, “In the short term we see continued demand for equipment at a lessened pace than we did in the fourth quarter of 2012. Until the issues in Washington regarding the budget are resolved, we don’t expect the economy to move forward at a pace that sustains strong demand for equipment acquisition.”
March 2013 Survey Results:
The overall MCI-EFI is 58.0, a decrease from the February index of 58.7.
• When asked to assess their business conditions over the next four months, 21.9 percent of executives responding said they believe business conditions will improve over the next four months, up from 20 percent in February. 71.9 percent of respondents believe business conditions will remain the same over the next four months, down from 77.1 percent in February. 6.3 percent believe business conditions will worsen, up from 2.9 percent the previous month.
• 21.9 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 20 percent in February. 68.8 percent believe demand will “remain the same” during the same four-month time period, down from 77.1 percent the previous month. 9.4 percent believe demand will decline, up from 2.9 percent in February.
• 28.1 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 22.9 percent in February. 68.8 percent of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 77.1 percent the previous month. 3.1 percent expect “less” access to capital, up from zero percent of respondents in February.
• When asked, 25 percent of the executives reported they expect to hire more employees over the next four months, up from 22.9 percent in February. 71.9 percent expect no change in headcount over the next four months, up from 65.7 percent last month. 3.1 percent expect fewer employees, down from 11.4 percent of respondents who expected fewer employees in February.
• 84.4 percent of the leadership evaluates the current U.S. economy as “fair,” down from 85.7 percent last month. 12.5 percent rate it as “poor,” up from 11.4 percent in February. One survey respondent rated the current economy as “excellent.”
• 15.6 percent of survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 22.9 percent in February. 71.9 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 74.3 percent in February. 12.5 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 2.9 percent who believed so last month.
• In March, 31.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37.1 percent in February. 68.8 percent believe there will be “no change” in business development spending, up from 60 percent last month. No one believes there will be a decrease in spending, down from 2.9 percent who believed so last month.