The Equipment Leasing & Finance Foundation (the Foundation) releases the January 2016 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. 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 is 54.0, easing from the December index of 60.2.
When asked about the outlook for the future, MCI-EFI survey respondent Harry Kaplun, President, Specialty Finance, Frost Bank, said, “The equipment finance business is very industry diverse. This diversity allows directional changes to the current growth sectors while still maintaining a presence in less robust sectors. Being nimble and adaptive continue to be key skills for success.”
January 2016 Survey Results:
The overall MCI-EFI is 54.0, easing from the December index of 60.2.
• When asked to assess their business conditions over the next four months, 10.7% of executives responding said they believe business conditions will improve over the next four months, a decrease from 12.5% in December. 78.6% of respondents believe business conditions will remain the same over the next four months, an increase from 75.0% in December. 10.7% believe business conditions will worsen, a decrease from 12.5% the previous month.
• 10.7% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 8.3% in December. 71.4% believe demand will “remain the same” during the same four-month time period, down from 79.2% the previous month. 17.9% believe demand will decline, an increase from 12.5% who believed so in December.
• 17.9% of executives expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 25.0% in December. 75.0% of survey respondents indicate they expect the “same” access to capital to fund business, an increase from 70.8% the previous month. 7.1% expect “less” access to capital, an increase from 4.2% last month.
• When asked, 32.1% of the executives report they expect to hire more employees over the next four months, a decrease from 45.8% in December. 64.3% expect no change in headcount over the next four months, up from 50.0% last month. 3.6% expect to hire fewer employees, down from 4.2% in December.
• 3.6% of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 4.2% last month. 92.9% of the leadership evaluate the current U.S. economy as “fair,” down from 95.8% in December. 3.6% rate it as “poor,” an increase from none the previous month.
• 3.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 8.3% who believed so in December. 75.0% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 79.2% the previous month. 21.4% believe economic conditions in the U.S. will worsen over the next six months, an increase from 12.5% who believed so last month.
• In January, 35.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 50.0% in December. 64.3% believe there will be “no change” in business development spending, an increase from 45.8% the previous month. None believe there will be a decrease in spending, a decrease from 4.2% last month.