ELFF: Equipment Finance Industry Confidence Steady in June

The Equipment Leasing & Finance Foundation released the June 2024 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 key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 50.2, steady with the May index of 50.7.

“The stress the industry is experiencing in small business lending continues with elevated bankruptcy, delinquency and a softening of credit quality. It is important to remember during these times that well-positioned businesses actually grow, take share of wallet and expand,” David Normandin, president and CEO of Wintrust Specialty Finance, said. “Our industry is well positioned to help continue the success of these businesses, as well as help those struggling through a rough time in the economy. I am optimistic that in a couple of years we will look back and recognize the positive impact we were able to have on the economy and the small business community.”

June 2024 Survey Results

The overall MCI-EFI is 50.2, steady with the May index of 50.7.

  • When asked to assess their business conditions over the next four months, 11.5% of the executives responding said they believe business conditions will improve over the next four months, relatively unchanged from 11.1% in May. 76.9% believe business conditions will remain the same over the next four months, down from 77.8% the previous month. 11.5% believe business conditions will worsen, also relatively unchanged from May.
  • 4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 11.1% in May. 77.8% believe demand will “remain the same” during the same four-month time period, down from 81.5% the previous month. 14.8% believe demand will decline, an increase from 7.4% in May.
  • 2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in May. 73.1% of executives indicate they expect the “same” access to capital to fund business, down from 77.8% last month. 7.7% expect “less” access to capital, relatively unchanged from the previous month.
  • When asked, 25.9% of the executives report they expect to hire more employees over the next four months, an increase from 22.2% in May. 66.6% expect no change in headcount over the next four months, down from 74.1% last month. 7.4% expect to hire fewer employees, up from 3.7% in May.
  • 9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 85.2% in May. 19.2% evaluate it as “poor,” up from 14.8% last month.
  • 8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 7.4% in May. 48.2% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% last month. 37% believe economic conditions in the U.S. will worsen over the next six months, an increase from 29.6% the previous month.
  • In June, 14.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 11.1% the previous month. 77.8% believe there will be “no change” in business development spending, down from 81.5% in May. 7.4% believe there will be a decrease in spending, unchanged from last month.

June 2024 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket

“I’m a believer that we can control our own optimism by recognizing where opportunities lie, asking what customers want, and then creating a realistic plan and executing it with a frequent follow-up process,” Donna Yanuzzi, executive vice president of 1st Equipment Finance, said.

Independent, Large Ticket

“Optimism is based on business initiatives to invest in new technologies and applications, but I believe, at a macro level, the headwinds are stronger than the tailwinds at the moment,” Jonathan Albin, chief operating officer of Nexseer Capital, said.

“The continuation of supply chain issues has led to further delay of new equipment deliveries, putting additional pressure on supply of equipment in our verticals relative to market demand,” Glenn Davis, CEO of RESIDCO, said.

Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed and the survey respondent demographics are also available at the link above.

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