The Equipment Leasing & Finance Foundation (the Foundation) released the July 2013 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 $725 billion equipment finance sector. Overall, confidence in the equipment finance market is 59.4, an increase from the June index of 57.3, reflecting industry participants’ increasing optimism despite continued moderate demand for equipment.
When asked about the outlook for the future, MCI survey respondent Russell Nelson, president, CoBank Farm Credit Leasing, said, “Demand for replacement/additions of equipment and facilities remains steady to increasing, with rising interest rates and equipment costs accelerating capital expenditures through the remainder of 2013. We have growing confidence that the economy and business climate will continue to post modest improvement during the next 18 months.”
July 2013 Survey Results
• When asked to assess their business conditions over the next four months, 25 percent of executives responding said they believe business conditions will improve over the next four months, up from 19.4 percent in June. 71.9 percent of respondents believe business conditions will remain the same over the next four months, up from 71 percent in June. 3.1 percent believe business conditions will worsen, down from 9.7 percent the previous month.
• 15.6 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 19.4 percent in June. 81.3 percent believe demand will “remain the same” during the same four-month time period, up from 71 percent the previous month. 3.1 percent believe demand will decline, down from 9.7 percent in June.
• 21.9 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 19.4 percent in June. 78.1 percent of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 80.6 percent the previous month. No one expects “less” access to capital, unchanged from June.
• When asked, 25 percent of the executives reported they expect to hire more employees over the next four months, a decrease from 29 percent in June. 68.8 percent expect no change in headcount over the next four months, up from 67.7 percent last month. 6.3 percent expect fewer employees, up from 3.2 percent of respondents who expected fewer employees in June.
• 90.6 percent of the leadership evaluates the current U.S. economy as “fair,” unchanged from last month. 9.4 percent rate it as “poor,” also unchanged from June.
• 34.4 percent of survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 22.6 percent in June. 62.5 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 71 percent in June. 3.1 percent believe economic conditions in the U.S. will worsen over the next six months, a decrease from 6.5 percent who believed so last month.
• In July, 31.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 25.8 percent in June. 68.8 percent believe there will be “no change” in business development spending, a decrease from 74.2 percent last month. No one believes there will be a decrease in spending, unchanged from June.