ELFF: Equipment Finance Market Confidence Down in January

The Equipment Leasing & Finance Foundation Monthly Confidence Index illustrated a further easing in equipment finance market confidence in January, decreasing from the December index of 55.5 to 53.4.

When asked about the outlook for the future, MCI-EFI survey respondent Thomas Jaschik, president of BB&T Equipment Finance, said, “I believe economic conditions in 2019 will be less favorable than 2018. As such, I expect the equipment finance industry to continue its growth, although at a lesser pace than the prior two years. Excess market liquidity will continue to adversely impact margins and will have a long-term impact on industry profitability. Creativity and efficiency will be key to future success.”

Other survey results included:

  • When asked to assess their business conditions over the next four months, 10% of executives responding said they believe business conditions will improve over the next four months, a decrease from 13.8% in December. 70% of respondents believe business conditions will remain the same over the next four months, an increase from 65.5% the previous month. 20% believe business conditions will worsen, down slightly from 20.7% who believed so the previous month.
  • 3.3% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a slight decrease from 3.5% in December. 80% believe demand will “remain the same” during the same four-month time period, an increase from 79.3% the previous month. 16.7% believe demand will decline, down from 17.2% who believed so in December.
  • 21.4% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 17.2% in December. 78.6% of executives indicate they expect the “same” access to capital to fund business, an increase from 75.9% last month. None expect “less” access to capital, down from 6.9% last month.
  • When asked, 33.3% of the executives report they expect to hire more employees over the next four months, a decrease from 44.8% in December. 53.3% expect no change in headcount over the next four months, an increase from 44.8% last month. 13.3% expect to hire fewer employees, up from 10.3% last month.
  • 36.7% of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 41.4% in December. 63.3% of the leadership evaluate the current U.S. economy as “fair,” an increase from 58.6% last month. None evaluate it as “poor,” unchanged from last month
  • 10% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down slightly from 10.7% in December. 50% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 53.6% the previous month. 40% believe economic conditions in the U.S. will worsen over the next six months, an increase from 35.7% in December.
  • In January, 26.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 42.9% last month. 73.3% believe there will be “no change” in business development spending, an increase from 57.1% in December. None believe there will be a decrease in spending, unchanged from last month.

“Businesses seem more cautious to continue expansion until the environment in Washington and the stock market becomes more stable. The government shutdown continues to emphasize the incredible polarization that exists in our government. This type of environment makes it difficult to consider investment in equipment,” said Valerie Hayes Jester, president, Brandywine Capital Associates.

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