Equipment Finance Industry Confidence Steady in January at Pre-COVID-19 Levels



According to the Equipment Leasing & Finance Foundation’s January 2021 Monthly Confidence Index for the Equipment Finance Industry, confidence in the equipment finance market is 59.6, unchanged from the December index and in line with pre-COVID-19 pandemic levels.

“As we enter a new year and a new administration, eyes will be on fiscal policy to get us through the final stretches of the pandemic,” Michael Romanowski, president of Farm Credit Leasing, said. “We expect business investment to increase once the path forward is clearer.”

When asked to assess their business conditions over the next four months, 33.3% of executives said they believe business conditions will improve over the next four months, up from 27.6% in December. Most respondents (59.3%) believe business conditions will remain the same over the next four months, a decrease from 62.1% the previous month, while 7.4% believe business conditions will worsen, a decrease from 10.3% in December.

A third of the survey respondents (33.3%) believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 27.6% in December. The majority of respondents (59.3%) believe demand will “remain the same” during the same four-month time period, an increase from 55.2% the previous month, while 7.4% believe demand will decline, down from 17.2% in December.

Only 18.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 24.1% in December. The majority of executives (81.5%) indicated that they expect the “same” access to capital to fund business, an increase from 75.9% last month. None of the respondents expect “less” access to capital, unchanged from the previous month.

When asked, 25.9% of the executives reported that they expect to hire more employees over the next four months, down from 31% in December. Roughly two-thirds of respondents (66.7%) expect no change in headcount over the next four months, a decrease from 69% last month, while 7.4% expect to hire fewer employees, up from none in December.

None of the leadership evaluated the current U.S. economy as “excellent,” unchanged from the previous month. Meanwhile, 77.8% of the leadership evaluated the current U.S. economy as “fair,” up from 72.4% in December, and 22.2% evaluated it as “poor,” down from 27.6% last month.

A little more than half of the survey respondents (51.9%) believe that U.S. economic conditions will get “better” over the next six months, a decrease from 55.2% in December. Meanwhile, 37% indicated that they believe the U.S. economy will “stay the same” over the next six months, an increase from 34.5% last month, and 11.1% believe economic conditions in the U.S. will worsen over the next six months, up from 10.3% the previous month.

In January, 22.2% of respondents indicated that they believe their company will increase spending on business development activities during the next six months, a decrease from 34.5% last month. Most respondents (74.1%) believe there will be “no change” in business development spending, an increase from 62.1% in December, while 3.7% believe there will be a decrease in spending, up slightly from 3.5% last month.

The COVID-19 Impact Survey of the Equipment Finance Industry, conducted monthly since its launch in May 2020 and released with the MCI-EFI, will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer-term effects of the pandemic’s impact on equipment finance companies going forward.

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Terry Mulreany
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