The Equipment Leasing & Finance Foundation (the Foundation) released the April 2012 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 $628 billion equipment finance sector. Overall, confidence in the equipment finance market is 62.1, up slightly from the March index of 61.7, and the fourth consecutive month of increases, indicating industry participants’ optimism is slowly but steadily rising.
When asked about the outlook for the future, MCI survey respondent Thomas Jaschik, president, BB&T Equipment Finance commented, “While the business climate has definitely improved over the last 18 months, American companies are still very cautious with respect to the growth and expansion of their businesses. As they feel more confident in expansion, our market will grow as well.”
April 2012 Survey Results:
The overall MCI-EFI is 62.1, an increase from the March index of 61.7.
When asked to assess their business conditions over the next four months, 23.5 percent of executives responding said they believe business conditions will improve over the next four months, down from 28.9 percent in March. 76.5 percent of respondents believe business conditions will remain the same over the next four months, up from 71.1 percent in March. No one responded they believe business conditions will worsen, unchanged from the previous month.
• 23.5 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 34.2 percent in March. 76.5 percent believe demand will “remain the same” during the same four-month time period, up from 65.8 percent the previous month. No one responded they believe demand will decline, unchanged from March.
• 26.5 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 21.1 percent in March. 73.5 percent of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 78.9 percent the previous month. No survey respondents expect “less” access to capital, unchanged from March.
• When asked, 32.4 percent of the executives reported they expect to hire more employees over the next four months, up from 28.9 percent in March. 67.6 percent expect no change in headcount over the next four months, an increase from 63.2 percent last month, while no one expects fewer employees, down from 7.9 percent in March.
• 88.2 percent of the leadership evaluates the current U.S. economy as “fair,” down from 89.5 percent last month. 11.8 percent rate it as “poor,” up from 10.5 percent in March.
• 29.4 percent of survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 31.6 percent in March. 70.6 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, up from 63.2 percent in March. No one responded that they believe economic conditions in the U.S. will worsen over the next six months, a decrease from 5.3 percent who believed so last month.
• In April, 35.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 28.9 percent in March. 64.7 percent believe there will be “no change” in business development spending, down from 77.1 percent last month, and no one believes there will be a decrease in spending, unchanged from last month.
Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.
Who Participates
in the MCI-EFI?
The 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.
How is the MCI-EFI Designed?
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
For more information, visit www.leasefoundation.org.
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