According to the Equipment Leasing & Finance Foundation’s January 2023 Monthly Confidence Index for the Equipment Finance Industry, overall confidence in the equipment finance market is 48.5, an increase from the December index of 45.9.
“2023 brings uncertainty, with a looming recession in front of us; yet robust volume and credit quality continue to be our experience,” David Normandin, president and CEO of Wintrust Specialty Finance, said. “Being nimble and creative to find solutions will be valuable attributes to have in your organization as we stretch our legs into 2023. Fortunately, this is where the commercial equipment finance industry has excelled and I believe it will once again.”
When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 3.7% in December. Meanwhile, 69.2% believe business conditions will remain the same over the next four months, up from 55.6% last month, and 30.8% believe business conditions will worsen, a decrease from 40.7% in December.
None of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, a decrease from 7.4% in December. However, 88.5% believe demand will “remain the same” during the same four-month time period, an increase from 70.4% last month, while 11.5% believe demand will decline, down from 22.2% in December.
According to the survey, 11.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 14.8% in December. Meanwhile, 73.1% of executives indicated they expect the “same” access to capital to fund business, an increase from 70.4% last month, and 15.4% expect “less” access to capital, up from 14.8% in December.
When asked, 38.5% of the executives reported they expect to hire more employees over the next four months, up from 33.3% in December. However, 61.5% expect no change in headcount over the next four months, an increase from 51.9% last month, although none expect to hire fewer employees, down from 14.8% in December.
None of the leadership evaluated the current U.S. economy as “excellent,” down from 3.7% in December. Instead, 84.6% of the leadership evaluated the current U.S. economy as “fair,” up from 70.4% in December, while 15.4% evaluated it as “poor,” a decrease from 25.9% last month.
There was a slight bit of optimism in the survey, as 7.7% of survey respondents said they believe U.S. economic conditions will get “better” over the next six months, an increase from none in December. Meanwhile, 57.7% indicated they believe the U.S. economy will “stay the same” over the next six months, an increase from 48.2% last month, while 34.6% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 51.9% in December.
In January, 23.1% of respondents indicated they believe their company will increase spending on business development activities during the next six months, down from 37% last month, while 73.1% believe there will be “no change” in business development spending, up from 59.3% in December, and 3.9% believe there will be a decrease in spending, unchanged from last month.
