ELFF: Equipment Finance Industry Confidence Falls in July

The Equipment Leasing & Finance Foundation released the July 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by executives from the $900 billion equipment finance sector. Overall confidence in the equipment finance market is 46.1, a decrease from the June index of 50.9.

“While people are likely to look with trepidation at recent federal government reactions to energy policy, inflation and our positioning with global threats, one aspect of our economy that remains strong is the move toward implementing new technologies to help businesses increase productivity and efficiency and best utilize the human resources they have available,” Adam Warner, president of Key Equipment Finance, said.

When asked to assess their business conditions over the next four months, 3.7% of executives said they believe business conditions will improve over the next four months, a decrease from 11.1% in June, while 63% believe business conditions will remain the same over the next four months, up from 55.6% the previous month, and 33.3% believe business conditions will worsen, unchanged from June.

“I am optimistic about the rising rate environment, specifically that it will bring margin back into our business, which will be healthy for the industry long term,” David Normandin, CLFP, president and CEO at Wintrust Specialty Finance, said. “I am concerned about the volatile economy that we are [in].”

According to the survey, 11.1% of the survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, unchanged from June, while 55.6% believe demand will “remain the same” during the same four-month time period, a decrease from 66.7% the previous month, and 33.3% believe demand will decline, up from 22.2% in June.

Only 11.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 22.2% in June. Meanwhile, most respondents (81.5%) expect the “same” access to capital to fund business, an increase from 77.8% last month, while 7.4% expect “less” access to capital, up from none last month.

When asked, 18.5% of the executives said they expect to hire more employees over the next four months, down from 29.6% in June, while 77.8% expect no change in headcount over the next four months, an increase from 66.7% last month, and 3.7% expect to hire fewer employees, unchanged from June.

In July, 11.1% of the leadership evaluated the current U.S. economy as “excellent,” an increase from 7.4% the previous month, while 77.8% of the leadership evaluated the current U.S. economy as “fair,” up from 74.1% in June, and 11.1% evaluated it as “poor,” a decrease from 18.5% last month.

Only 7.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from June. Meanwhile, 40.7% believe the U.S. economy will “stay the same” over the next six months, an increase from 37% last month, while 51.9% believe economic conditions in the United States will worsen over the next six months, a decrease from 55.6% last month.

In July, 22.2% of respondents indicated they believe their company will increase spending on business development activities during the next six months, down from 40.7% the previous month. Most respondents (74.1%) believe there will be “no change” in business development spending, up from 59.3% in June, and 3.7% believe there will be a decrease in spending, up from none last month.

“If the federal government will stop flooding the economy with money, inflation should subside and the economy will respond accordingly,” James D. Jenks, CEO at Global Finance and Leasing Services, said.

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