Confidence Up in August Despite ‘General Slowdown’ in Asset Acquisitions

According to the August 2016 monthly confidence index from the Equipment Leasing and Finance Foundation, confidence in the equipment finance market is 54.8, an increase from the July index of 52.5.

When asked about the outlook for the future, survey respondent Adam D. Warner, president of Key Equipment Finance, said, “There seems to be a general slowdown in capital asset acquisitions. There is enough negative overhang and fallout from the U.S. presidential campaign combined with continued concerns about Europe and China that have businesses unsure about investments in growth.”

When asked to assess their business conditions over the next four months, 10.0% of executives said they believe business conditions will improve over the next four months, a decrease from 12.1% in July. That matches the 10.0% who believe business conditions will worsen, a decrease from 12.1% the previous month.

Demand for leases and loans to fund capital expenditures appears to be on the upswing, with 13.3% of survey respondents believing demand will increase over the next four months, an increase from 12.1% in July. However, more respondents believe demand will decline (16.7%), although that reading marks a hefty decrease from 30.3% in July.

“Though the market remains competitive, we continue to see financing opportunities from our client base,” said Thomas Partridge, president of Fifth Third Equipment Finance. “Concerns over the outcome of the elections could impact spending in the short term.”

Confidence in having more access to capital to fund equipment acquisitions soured, with only 13.3% of executives expecting such access over the next four months, a decrease from 15.2% in July. Meanwhile, 6.7% expect less access to capital, an increase from 6.1% last month.

When asked, 40.0% of the executives said they expect to hire more employees over the next four months, an increase from 30.3% in July. Despite this, 10.0% expect to hire fewer employees, up from 6.1% in July.

“While the employment numbers look positive, the recent GDP number seems anemic,” said William H. Besgen, senior advisor and vice chairman emeritus, Hitachi Capital America. “Growth in new business volumes has softened and there is a slight uptick in delinquencies, despite aggressive collections efforts. The outlook is unclear.”

None of the leadership evaluates the current U.S. economy as excellent, unchanged from last month, while 90.0% of the leadership evaluates the current U.S. economy as fair, a decrease from 100% last month.

None of the survey respondents believe that U.S. economic conditions will get better over the next six months, a decrease from 3.0% in July. The majority (96.7%) of survey respondents indicated that they believe the U.S. economy will stay the same over the next six months, an increase from 78.8% the previous month. That middling opinion is evident because of the decrease in those who believe economic conditions will get worse over the next six months, with 3.3% of respondents having that view, down from 18.2% who believed so last month.

In August, 40.0% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 36.4% in July. None believe there will be a decrease in spending, a decrease from 3.0% who believed so last month.

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Terry Mulreany
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