Equipment Finance Industry Confidence Continues Recent Slide in March
MAR 17, 2022 - 6:07 am
According to the Equipment Leasing & Finance Foundation’s March 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 58.2 this month, easing from the February reading of 61.8. The ELFF’s confidence metric has now declined in four straight months.
“Supply chain issues continue to hamper equipment availability,” Michael Romanowski, president of Farm Credit Leasing, said. “The Ukraine conflict has enhanced volatility and is contributing to an already unsettled environment. We continue to work closely with our partners and customers to ensure we are advancing our mission in these uncertain times.”
When asked to assess their business conditions over the next four months, 21.4% of executives said they believe business conditions will improve over the next four months, a decrease from 24.1% in February. Meanwhile an even 50% believe business conditions will remain the same over the next four months, down from 69% last month, and 28.6% believe business conditions will worsen, an increase from 6.9% in February.
“While equity markets, crude, supply chain and global industry trade have all been greatly impacted by the Russian invasion of Ukraine, it is the suffering and loss of life that is most disturbing. I am proud of Key’s immediate humanitarian efforts on behalf of the Ukrainian people,” Adam Warner, president of Key Equipment Finance, said.
A quarter (25%) of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 24.1% in February, while the remaining 75% believe demand will “remain the same” during the same four-month time period, an increase from 72.4% last month. None of the respondents believe demand will decline, down from 3.5% in February.
“Through 2021, often businesses used their federal government stimulus money to purchase capital equipment and services,” James D. Jenks, CEO of Global Finance and Leasing Services, said. “The deeper we get into 2022, increasingly, these businesses will return to financing their capital equipment purchases.”
In March, 21.4% of the respondents said they expect more access to capital to fund equipment acquisitions over the next four months, up from 17.2% in February, while 78.6% said they expect the “same” access to capital to fund business, a decrease from 82.8% last month. None of the respondents said they expect “less” access to capital, unchanged from February.
When asked, 46.4% of the executives said they expect to hire more employees over the next four months, up from 44.8% in February, while 50% expect no change in headcount over the next four months, a decrease from 55.2% last month, and 3.6% expect to hire fewer employees over the next four months, up from none in February.
Only 3.6% of the leadership evaluated the current U.S. economy as “excellent,” a decrease from 10.3% last month. The majority (85.7%) of respondents evaluated the current U.S. economy as “fair,” down from 86.2% in February, while 10.7% evaluated it as “poor,” an increase from 3.5% last month.
In March, 7.1% of survey respondents said they believe U.S. economic conditions will get “better” over the next six months, a decrease from 24.1% in February. Meanwhile, 57.1% of respondents said they believe the U.S. economy will “stay the same” over the next six months, a decrease from 58.6% last month. Waning optimism meant 35.7% of respondents said they believe economic conditions in the U.S. will worsen over the next six months, an increase from 17.2% in February.
Of all respondents, 42.9% said they believe their company will increase spending on business development activities during the next six months, down from 44.8% last month, while 57.1% believe there will be “no change” in business development spending, up from 51.7% in February. None of the respondents believe there will be a decrease in spending, down from 3.5% last month.
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