Equipment Finance Industry Confidence Improves Again in February

According to the Equipment Leasing & Finance Foundation‘s February 2023 Monthly Confidence Index for the Equipment Finance Industry, confidence in the equipment finance market during this month reached a mark of 51.8, an increase from the January index of 48.5.

“We still see pent-up demand in the light and medium-duty segment of transportation. However, we feel it will wane by the third or fourth quarter of this year,” Jim DeFrank, executive vice president and chief operating officer of Isuzu Finance of America, said.

When asked to assess their business conditions over the next four months, 16.1% of the executives said they believe business conditions will improve over the next four months, an increase from 0% in January. Meanwhile, 61.3% believe business conditions will remain the same over the next four months, down from 69.2% last month, and 22.6% believe business conditions will worsen, a decrease from 30.8 % in January.

According to the survey, 9.7% of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 0% in January, while 71% believe demand will “remain the same” during the same four-month time period, a decrease from 88.5% last month. Meanwhile, 19.4% believe demand will decline, up from 11.5% in January.

The survey also found that 12.9% of respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 11.5% in January. Nearly three-quarters (74.2%) of executives indicated they expect the “same” access to capital to fund business, an increase from 73.1% last month, while 12.9% expect “less” access to capital, down from 15.4% in January.

When asked, 38.7% of the executives reported they expect to hire more employees over the next four months, unchanged from January. More than half (54.8%) expect no change in headcount over the next four months, a decrease from 61.5% last month, while 6.5% expect to hire fewer employees, up from 0% in January.

None of the leadership evaluated the current U.S. economy as “excellent,” unchanged from last month. The majority of respondents (87.1%) evaluated the current U.S. economy as “fair,” up from 84.6% in January, while 12.9% evaluated it as “poor,” a decrease from 15.4% last month.

Only 3.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 7.7% in January, while 54.8% believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7% last month, and 41.9% believe economic conditions in the U.S. will worsen over the next six months, an increase from 34.6% in January.

In February, 51.6% of respondents indicated they believe their company will increase spending on business development activities during the next six months, up from 23.1% last month. Meanwhile, 41.9% believe there will be “no change” in business development spending, down from 73.1% in January, and 6.5% believe there will be a decrease in spending, up from 3.9% last month.

“Recession is likely staying on the sidelines as long as there is a shortage of employees to fill open job positions,” James D. Jenks, CEO of Global Finance and Leasing Services, said.

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