Equipment Finance Industry Confidence Holds Steady in October

According to the Equipment Leasing & Finance Foundation’s October 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 61.1, an increase from the September index of 60.5.

“Business volume is increasing coming out of the summer months, portfolio performance is sound and we are optimistic for a solid Q4 2021,” David Normandin, CLFP, president and CEO of Wintrust Specialty Finance, said when asked about the outlook for the future.

When asked to assess their business conditions over the next four months, 25.9% of executives said they believe business conditions will improve, up from 17.9% in September. Meanwhile, 70.4% believe business conditions will remain the same over the next four months, down from 71.4% the previous month, and 3.7% believe business conditions will worsen, down from 10.7% in September.

“I don’t feel a great deal of optimism looking forward. The supply chain bottleneck is likely to improve, and as it does, the general pick-up in the economy will follow,” James D. Jenks, CEO of Global Financing & Leasing Services, said.

According to the survey, 22.2% of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 21.4% in September. At the same time, 74.1% believe demand will “remain the same” during the same four-month time period, a decrease from 75% the previous month, while 3.7% believe demand will decline, up from none in September.

“We have seen strong new business opportunities over the last six months, so while our survey answers are ‘about the same,’ that’s because we have already seen the turn, and this level of activity is, in fact, very strong,” Bruce J. Winter, president of FSG Capital, said.

The survey found that 14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 32.1% in September. A majority (85.2%) of executives expect the “same” access to capital to fund business, an increase from 67.9% last month. None expect “less” access to capital, unchanged from the previous month.

When asked, 40.7% of the executives reported they expect to hire more employees over the next four months, up from 28.6% in September. More than half (59.3%) expect no change in headcount over the next four months, a decrease from 71.4% last month. None expect to hire fewer employees, unchanged from September.

Among respondents, 7.4% evaluated the current U.S. economy as “excellent,” a slight increase from 7.1% last month. The majority (81.5%) of the leadership evaluated the current U.S. economy as “fair,” down from 92.9% in September, while 11.1% evaluated it as “poor,” up from none last month.

According to the survey, 22.2% of respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 17.9% in September, while 63% believe the U.S. economy will “stay the same” over the next six months, a decrease from 64.3% from last month, and 14.8% believe economic conditions in the U.S. will worsen over the next six months, down from 17.9% last month.

In October, 42.9% of respondents indicated they believe their company will increase spending on business development activities during the next six months, 57.1% believe there will be “no change” in business development spending and none believe there will be a decrease in spending, all unchanged from last month.

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