Equipment Leasing and Finance Industry Confidence Reaches All-Time High
Overall, confidence in the equipment finance market is 73.4, an increase from the December index of 67.5, according to the Equipment Leasing & Finance Foundation’s January 2017 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). January marks the highest index since the MCI was launched in May 2009 to track recovery after the 2008 downturn.
The MCI-EFI was designed to collect leadership data and reports a qualitative assessment of the prevailing business conditions and expectations for the future, as reported by key executives from the $1 trillion equipment finance sector.
“The outlook for U.S. companies has become much more positive since the presidential election. Lower taxes, less regulation and rising interest rates will be the catalyst to spur capital asset acquisitions. This will undoubtedly set the stage for robust equipment finance activity,” says survey respondent Thomas Jaschik, president of BB&T Equipment Finance, when asked about the outlook for the future.
JANUARY 2017 SURVEY RESULTS
The overall MCI-EFI is 73.4, an increase from the December index of 67.5.
When asked to assess their business conditions during the next four months, 74.2 percent of executives responding said they believe business conditions will improve during the next four months, an increase from 48.4 percent in December. 22.6 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 45.2 percent in December. 3.2 percent believe business conditions will worsen, a decrease from 6.5 percent the previous month.
DEMAND FOR LEASES AND LOANS
Seventy-one percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase during the next four months, an increase from 38.7 percent in December. 25.8 percent believe demand will “remain the same” during the same four-month time period, down from 54.8 percent the previous month. 3.2 percent believe demand will decline, down from 6.5 percent who believed so in December.
ACCESS TO CAPITAL
19.4 percent of the respondents expect more access to capital to fund equipment acquisitions during the next four months, a decrease from 22.6 percent who expected more in December. 80.6 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 77.4 percent the previous month. None expect “less” access to capital, unchanged from last month.
When asked, 35.5 percent of the executives report they expect to hire more employees during the next four months, a decrease from 41.9 percent in December. 61.3 percent expect no change in headcount during the next four months, an increase from 48.4 percent last month. 3.2 percent expect to hire fewer employees, down from 9.7 percent in December.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. One hundred percent of the leadership evaluate the current U.S. economy as “fair,” and none evaluate it as “poor,” both also unchanged from December.
61.3 percent of the survey respondents believe that U.S. economic conditions will get “better” during the next six months, a decrease from 71 percent in December. 38.7 percent of survey respondents indicate they believe the U.S. economy will “stay the same” during the next six months, an increase from 25.8 percent the previous month. None believe economic conditions in the U.S. will worsen over the next six months, a decrease from 3.2 percent who believed so last month.
In January, 58.1 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 48.4 percent in December. 41.9 percent believe there will be “no change” in business development spending, a decrease from 51.6 percent the previous month. None believe there will be a decrease in spending, unchanged from last month.
To read the full report, visit http://www.leasefoundation.org.