According to the Equipment Leasing & Finance Foundation’s June 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 71.3, which is steady with the May index of 72.1.
“Companies across all industries are investing in new projects to stay ahead and better serve their customers while also investing in technology and programs to better serve their employees in the ‘new normal’ hybrid work environment,” Alan Sikora, CLFP, CEO of First American Equipment Finance, an RBC/City National Company, said.
When asked to assess their business conditions over the next four months, 42.3% of executives said they believe business conditions will improve over the next four months, down from 53.6% in May. Meanwhile, 57.7% of respondents believe business conditions will remain the same over the next four months, up from 46.4% the previous month, and none of the respondents believe business conditions will worsen, unchanged from May.
“The equipment finance industry is nimble and will excel coming out of challenging times,” David Normandin, CLFP, president and CEO of Wintrust Specialty Finance, said. “I believe this will happen as we come out of the COVID-19 pandemic and its effects on businesses. I still remain cautious as to the assertive pricing in the market with little room to accept the volatility that still remains in the market.”
A little more than half (51.9%) of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 53.6% in May. The remaining 48.2% of respondents believe demand will “remain the same” during the same four-month time period, an increase from 46.4% the previous month. None of the respondents believe demand will decline, unchanged from May.
“We are seeing a significant increase in bid activity and requests for capital equipment lease lines,” Aylin Cankardes, president of Rockwell Financial Group, said.
In June, 32.1% of the respondents said they expect more access to capital to fund equipment acquisitions over the next four months, 67.9% of executives said they expect the “same” access to capital to fund business and none of the respondents said they expect “less” access to capital. All of those totals were unchanged from May.
When asked, 46.2% of the executives reported they expect to hire more employees over the next four months, up from 39.3% in May. An even 50% of respondents expect no change in headcount over the next four months, a decrease from 60.7% last month. Meanwhile, 3.9% expect to hire fewer employees, up from none in May.
Overall, 22.2% of the leadership evaluated the current U.S. economy as “excellent,” an increase from 10.7% in May, while 77.8% of the leadership evaluated the current U.S. economy as “fair,” down from 89.3% in May. None of the leadership evaluated the current U.S. economy as “poor,” unchanged from last month.
A little more than half (51.9%) of the survey respondents believe U.S. economic conditions will get “better” over the next six months, a decrease from 60.7% in May. The remaining 48.2% of respondents believe the U.S. economy will “stay the same” over the next six months, an increase from 39.3% last month. None of the respondents believe economic conditions in the U.S. will worsen over the next six months, unchanged from the previous month.
In June, 48.2% of respondents believe their company will increase spending on business development activities during the next six months, down from 53.6% last month. Meanwhile, 51.9% believe there will be “no change” in business development spending, an increase from 42.9% in May. None of the respondents believe there will be a decrease in spending, down from 3.6% last month.
“We’re continuing to see investment by our customers,” Michael Romanowski, president of Farm Credit Leasing, said. “Some equipment purchases and facility projects are being delayed by supply side issues. Rising prices for steel and lumber are a concern and could dampen facility investment.”
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