Equipment Leasing Industry Confidence Eases in November



According to the Equipment Leasing & Finance Foundation’s November 2016 Monthly Confidence Index, confidence in the equipment finance market is 54.6, easing from the October index of 56.0.

It should be noted that the majority of executives submitted their MCI survey responses prior to the U.S. elections.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president of Brandywine Capital Associates, said post-election, “The industry continues to increase market share and develop new opportunities within commercial segments. Portfolios continue to perform well in spite of moderately increasing delinquency statistics. Now that the election is over, I hope that small and mid-size business owners decide to move forward on expansion projects that had been stalled due to uncertainty in Washington.”

When asked to assess their business conditions over the next four months, 13.8% of executives said they believe business conditions will improve over the next four months, an increase from 12.1% in October. However, 17.2% believe business conditions will worsen, an increase from 6.1% the previous month.

There was a decrease in the number of respondents who believe demand for leases and loans to fund capital expenditures will increase, with 13.8% indicating such a view compared to 24.2% last month. However, that did not go with a corresponding negative view about demand, as there was a slight decrease in that notion from 18.2% in October to 17.2% in November. This shows that most executives believe demand will remain the same (69%).

“While demand for equipment financing on a national scope is tepid, regional and industry demand is still vibrant,” said Harry Kaplun, president of Specialty Finance at Frost Bank. “Select areas of the country are continuing to grow. This growth stems from population movement to more business-friendly locations.”

Similarly, a vast majority of executives expect the same access capital to fund business in the next four months (82.8%), with declines in both those who believe access will be greater and lesser from the previous month’s survey.

When asked, 34.5% of the executives report they expect to hire more employees over the next four months, an increase from 30.3% in October. A few more companies expect to hire fewer employees (10.3%) compared to October’s readings (9.1%).

The index did not show much of a strong feeling among executives with 100% of the leadership evaluating the current U.S. economy as fair, an increase from 93.9% last month.

Surprisingly, the future of the economy has its believers and detractors, with 17.2% of the survey respondents expecting that U.S. economic conditions will get better over the next six months, an increase from 15.2% in October.  The same percentage of respondents (17.2%) believe economic conditions in the U.S. will worsen over the next six months, an increase from the 15.2% who believed so last month.

In November, 37.9% of respondents indicated they believe their company will increase spending on business development activities during the next six months, an increase from 36.4% in October. However, 3.4% believe there will be a decrease in spending, an increase from none who believed so last month.


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