According to the Equipment Leasing & Finance Foundation’s December 2021 Monthly Confidence Index for the Equipment Finance Industry, overall confidence in the equipment finance market is 63.9, a decrease from the November index of 64.6.

“The near-term future of the equipment finance industry shows promise for continued expansion,” Daniel J. Krajewski, president and CEO of Sertant Capital, said. “As infrastructure bills are passed and implemented, there will be a demand for many asset classes, from construction through IT platforms. This, of course, will need to be supported by increased manufacturing capacity to build all the required capital goods. I do have concerns about the political atmosphere that currently exists in the U.S. that may slow down or even kill the entire infrastructure bill, and secondly, the supply chain issues that have bottlenecked the product delivery system.”

When asked to assess their business conditions over the next four months, 34.6% of executives said they believe business conditions will improve, unchanged from November, while 61.5% believe business conditions will remain the same, up from 46.2% in November. The remaining 3.9% believe business conditions will worsen over the next four months, down from 19.2% in November.

“There is still significant liquidity in the markets and productivity continues to thrive. The impact of inflation and upcoming rate hikes could provide pause, but we continue to see strong demand on capital equipment expenditures,” Aylin Cankardes, president of Rockwell Financial Group, said. “The biggest hurdle is prolonged supply chain disruptions, but it’s encouraging to see organizations transforming to address them innovatively going into 2022.”

A little more than a quarter (26.9%) of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 42.3% in November, while 73.1% believe demand will “remain the same” during the same four-month time period, an increase from 50% in November. None believe demand will decline, down from 7.7% in November.

“Demand for equipment loans and leases remains strong in nearly all sectors. Large U.S. businesses are looking to fixed-rate financing as a strategy to mitigate the impact of inflation,” Alan Sikora, CLFP, CEO of First American Equipment Finance, said.

“Demand for capital expenditures remains robust. Customers are looking to mitigate labor shortage challenges with automation,” Michael Romanowski, president of Farm Credit Leasing, said. “We believe this trend will continue through 2022 and into 2023. Supply chain headwinds continue to frustrate automation plans.”

In December, 19.2% of survey respondents said they expect more access to capital to fund equipment acquisitions over the next four months, down from 26.9% in November, while 80.8% of executives indicated they expect the “same” access to capital to fund business, an increase from 73.1% last month. None expect “less” access to capital, unchanged from November.

When asked, 42.3% of the executives reported they expect to hire more employees over the next four months, down from 53.9% in November, while 57.7% expect no change in headcount over the next four months, an increase from 46.2% last month. None expect to hire fewer employees, unchanged from November.

In December, 19.2% of the leadership evaluated the current U.S. economy as “excellent,” an increase from 15.4% in November, while 76.9% of the leadership evaluated the current U.S. economy as “fair,” down from 80.8% in November. The remaining 3.9% of executives evaluated the current U.S. economy as “poor,” unchanged from last month.

“Our clients remain resilient, powering though the pandemic, supply chain issues and inflation to meet their objectives,” Adam Warner, president of Key Equipment Finance, said. “Key remains vigilant that the continued battle against COVID will eventually lessen the risks to our customers and our economy.”

This month, 19.2% of survey respondents believe U.S. economic conditions will get “better” over the next six months, a decrease from 23.1% in November, while 61.5% believe the U.S. economy will “stay the same” over the next six months, an increase from 57.7% last month. At the same time, 19.2% believe economic conditions in the U.S. will worsen over the next six months, unchanged from November.

In December, 46.2% of respondents indicated they believe their company will increase spending on business development activities during the next six months, up from 42.3% the previous month, while 53.9% believe there will be “no change” in business development spending, down from 57.7% in November. None believe there will be a decrease in spending, unchanged from last month.