According to the Equipment Leasing & Finance Foundation’s February 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 61.8, easing from the January index of 63.9.

“The equipment finance industry is solid right now,” James D. Jenks, CEO of Global Finance and Leasing Services, said. “With inflation, we will experience increases in the cost of money. With the increase in the cost of money, we will experience a slowdown in the economy and delinquencies will increase.”

When asked to assess their business conditions over the next four months, 24.1% of executives said they believe business conditions will improve over the next four months, a decrease from 25.9% in January, while 69% believe business conditions will remain the same over the next four months, down from 70.4% last month, and 6.9% believe business conditions will worsen, an increase from 3.7% in January.

Just under a quarter (24.1%) of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.9% in January, while 72.4% believe demand will “remain the same” during the same four-month time period, an increase from 70.4% last month, and 3.5% believe demand will decline, unchanged from January.

“I see volatility in the market that will provide opportunities for companies nimble enough to embrace them and quick enough to take advantage,” David Normandin, CLFP, president and CEO of Wintrust Specialty Finance, said.

In February, 17.2% of the respondents said they expect more access to capital to fund equipment acquisitions over the next four months, down from 21.4% in January, while 82.8% of executives indicated they expect the “same” access to capital to fund business, an increase from 78.6% last month, and none expect “less” access to capital, unchanged from January.

When asked, 44.8% of the executives said they expect to hire more employees over the next four months, up from 39.3% in January, while 55.2% expect no change in headcount over the next four months, a decrease from 60.7% last month. None expect to hire fewer employees, unchanged from January.

Only 10.3% of the leadership evaluated the current U.S. economy as “excellent,” a decrease from 14.8% last month, while 86.2% of the leadership evaluated the current U.S. economy as “fair,” up from 81.5% in January, and 3.5% evaluated it as “poor,” unchanged from last month.

“We’re in an interesting period as we wait to see what the Fed will do. We all know rates will go up but by how much? Customers are looking at their options and the savvy ones are looking to lock in today’s low rates for longer-term leases,” Michael Romanowski, president of Farm Credit Leasing, said.

In February, 24.1% of survey respondents said they believe U.S. economic conditions will get “better” over the next six months, a decrease from 29.6% in January, while 58.6% indicated they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% last month, and 17.2% said they believe economic conditions in the U.S. will worsen over the next six months, an increase from 7.4% in January.

Lastly, 44.8% of respondents said they believe their company will increase spending on business development activities during the next six months, down from 50% in January, while 51.7% believe there will be “no change” in business development spending, up from 50% in January, and 3.5% believe there will be a decrease in spending, up from none last month.