Equipment Finance Industry Confidence Spikes Post-Election

According to the Equipment Leasing & Finance Foundation’s December 2016 Monthly Confidence Index, confidence in the equipment finance market is 67.5, a sharp increase from the November index of 54.6, with equipment finance executives expressing post-election optimism.

When asked about the outlook for the future, survey respondent David Normandin, managing director of the Commercial Finance Group of Hanmi Bank, said, “I am optimistic as the election cycle is finally behind us, and regardless of the side, people will begin to accept it and move forward. I also think an interest rate increase will be healthy, and I believe that we will see that happen this coming year.”

When asked to assess their business conditions over the next four months, 48.4% of executives said they believe business conditions will improve over the next four months, a major increase from 13.8% in November. Parallel to that rise was a nearly 10% drop in those who believe business conditions will worsen.

“The results of the election should lead to a more favorable business environment over time. The anticipation of this has already had a positive impact and is beginning to shift the mindsets of business leaders and investors,” said Robert Boyer, president of Susquehanna Commercial Finance, who still expressed some trepidation. “I am concerned about the potential negative impact the anticipated tax reform may have on our industry segment.”

There was also a large spike in the number of respondents who believe demand for leases and loans to fund capital expenditures will increase over the next four months (38.7%), up from from 13.8% in November.

Nearly a quarter of respondents (22.6%) expect more access to capital to fund equipment acquisitions over the next four months, an increase from 13.8% who expected more in November. No respondents indicated an expectation for less access to capital, a decrease from 3.4% last month.

“I believe that with the election now over there will be a more stable and hopefully a more positive business environment, which will translate to an increase in financing opportunities,” said William H. Besgen, senior advisor and vice chairman emeritus of Hitachi Capital America.

When asked, 41.9% of the executives said they expect to hire more employees over the next four months, an increase from 34.5% in November. However, there was only a marginal decrease in the number who plan to hire fewer people (9.7%) compared to November (10.3%).

All respondents are still not entirely bullish on the U.S. economy, with 100% of respondents evaluating the current conditions as fair.

However, 71.0% of the survey respondents believe that U.S. economic conditions will get better over the next six months, a drastic increase from 17.2% in November.

In addition, 48.4% of respondents indicated they believe their company will increase spending on business development activities during the next six months, an increase from 37.9% in November.

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Terry Mulreany
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