The Equipment Leasing & Finance Foundation released the October 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market is 61.8, steady with the September index of 61.9, which was the highest level since January 2022. 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.
“The future for the American economy actually looks bright compared to the international scene, and manufacturing will continue to re-shore with increasing need for capital spending,” Brent Hall, CLFP, senior vice president of Alliance Funding Group, said.
October 2024 Survey Results
The overall MCI-EFI is 61.8, steady with the September index of 61.9.
- When asked to assess their business conditions over the next four months, 37.9% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 40% in September. 51.7% believe business conditions will remain the same over the next four months, relatively unchanged from 52% the previous month. 10.3% believe business conditions will worsen, up from 8% in September.
- 8% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 44% in September. 41.4% believe demand will “remain the same” during the same four-month time period, down from 52% the previous month. 13.8% believe demand will decline, an increase from 8.4% in September.
- 6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 24% in September. 72.4% of executives indicate they expect the “same” access to capital to fund business, down from 76% last month. None expect “less” access to capital, unchanged from the previous month.
- When asked, 24.1% of the executives report they expect to hire more employees over the next four months, an increase from 20% in September. 65.5% expect no change in headcount over the next four months, down from 68% last month. 10.3% expect to hire fewer employees, down from 12% in September.
- 9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 93.1% evaluate the economy as “fair,” down from 96% in September, while none evaluate it as “poor,” a decrease from 4% last month.
- 9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 24% in September. 51.7% indicate they believe the U.S. economy will “stay the same” over the next six months, down from 76% last month. 10.3% believe economic conditions in the U.S. will worsen over the next six months, an increase from none the previous month.
- In October, 34.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 36% the previous month. 55.2% believe there will be “no change” in business development spending, down from 56% in September. 10.3% believe there will be a decrease in spending, up from 8% last month.
October 2024 MCI-EFI Survey Comments from Industry Executive Leadership
Bank, Small Ticket
“With the upcoming election close and the Fed starting the cycle of rate cuts, the uncertainty around these specific concerns will lessen,” David Normandin, CLFP, president and CEO of Wintrust Specialty Finance, said. “I think this will help business get back to work solving their customers’ problems and increase investment in capital equipment. Additionally, equipment finance companies, specifically within the bank segment, have unfrozen and are actively investing in the equipment finance sector providing needed access to capital at more attractive rates.”
Bank, Large Ticket
“Lower interest rates will ignite capex for smaller companies that have been on the sidelines for a few years and need to add or replace equipment for growth,” Jeffry Elliott, CLFP, president of Huntington Equipment Finance, said. “Getting past the election should provide some clarity on the economic direction of the U.S., thus more capex investments can be made. Lastly, onshoring will continue to promote infrastructure investment which requires capex spending to execute.”
Captive, Small Ticket
“The Fed’s intent to lower interest rates combined with stabilizing of inflation will stimulate investment, spending and expansion,” Jim DeFrank, executive vice president and chief operating officer of Isuzu Finance of America, said.
