According to the Equipment Leasing & Finance Foundation‘s July 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) , overall confidence in the equipment finance market is 46.4, an increase from the June index of 44.1.
“The equipment leasing and finance industry as a whole is relatively nimble,” David Normandin, president and CEO of Wintrust Specialty Finance, said. “That is and will continue to be tested this year. I am confident that the industry will step up to the challenges and create solutions to meet the needs of our partners and customers.”
July 2023 Survey Results
When asked to assess their business conditions over the next four months, 7.7% of the responding executives said they believe business conditions will improve over the next four months, an increase from 3.3% in June. More than half of respondents (65.4%) believe business conditions will remain the same over the next four months, down from 73.3% in June, while 26.9% believe business conditions will worsen, an increase from 23.3% in June.
According to the survey, 7.7% of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 6.7% in June. Most respondents (69.2%) believe demand will “remain the same” during the same four-month time period, an increase from 66.7% in June, while 23.1% believe demand will decline, down from 26.7% in June.
“Key Equipment Finance remains very encouraged by our clients’ financial performance as they navigate the uncertain macroeconomic climate. We have not seen any meaningful credit degradation in our portfolios, and we expect that to hold up for the remainder of the year,” Adam Warner, president of Key Equipment Finance, said.
The survey found that 7.7% of respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 6.7% in June. Most of the executives (76.9%) indicated they expect the “same” access to capital to fund business, unchanged from last month, while 15.4% expect “less” access to capital, down from 16.7% in June.
“For most companies, revenues continue to come in, albeit a little slower, and financing their capital equipment acquisitions protects their cash flow,” James D. Jenks, CEO of Global Finance and Leasing Services, said.
When asked, 15.4% of the executives reported they expect to hire more employees over the next four months, an increase from 13.3% in June. Meanwhile, 76.9% expect no change in headcount over the next four months, unchanged from last month, while 7.7% expect to hire fewer employees, down from 10% in June.
Only 3.9% of the leadership evaluated the current U.S. economy as “excellent,” although that was up from none last month. Meanwhile, 80.8% of the leadership evaluated the current U.S. economy as “fair,” down from 83.3% in June, and 15.4% evaluated it as “poor,” a decrease from 16.7% last month.
According to the survey, 11.5% of respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 6.7% in June. More than half of respondents (53.9%) indicated they believe the U.S. economy will “stay the same” over the next six months, an increase from 40% last month, while 34.6% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 53.3% last month.
In July, 26.9% of respondents indicated they believe their company will increase spending on business development activities during the next six months, down from 30% last month, while 61.5% believe there will be “no change” in business development spending, up from 56.7% in June, and 11.5% believe there will be a decrease in spending, down from 13.3% last month.
