Equipment Leasing Confidence Reaches All-Time High

The Equipment Leasing & Finance Foundation released its monthly confidence index for the equipment finance industry and the results were astoundingly positive.

Overall, confidence in the equipment finance market is 73.4, an increase from the December index of 67.5, and the highest index since the MCI was launched in May 2009 to track recovery after the 2008 downturn.

When asked about the outlook for the future, survey respondent Thomas Jaschik, president of BB&T Equipment Finance, said, “The outlook for U.S. companies has become much more positive since the presidential election. Lower taxes, less regulation and rising interest rates will be the catalyst to spur capital asset acquisitions. This will undoubtedly set the stage for robust equipment finance activity.”

When asked to assess their business conditions over the next four months, 74.2% of executives responding said they believe business conditions will improve over the next four months, a prodigious increase from 48.4% in December.

“Small business confidence is very high and we are optimistic that this will equate to more demand for capital expenditures,” said David T. Schaefer, CEO of Mintaka Financial. “Hopefully, tax reform doesn’t create too much uncertainty.”

Survey respondents echoed Schaefer’s sentiments as there was also an incredible jump in expectations for lease demand, with 71.0% of survey respondents saying they believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, an increase from 38.7% in December.

“December new business volume and opportunity pipeline growth indicate increased capital investment activity and utilization of financing for acquisition,” said Robert Boyer, president of Susquehanna Commercial Finance. “I view the rising rate environment as a positive indication and a shift from stagnation to a more normal economic cycle.”

However, only 19.4% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 22.6% who expected more in December. No respondents anticipate less access to capital, however, which is unchanged from December.

Improved business conditions do not necessarily mean anything for employment in the industry. When asked, 35.5% of the executives report they expect to hire more employees over the next four months, a decrease from 41.9% in December. Headcount should remain steady, however, as only 3.2% expect to hire fewer employees, down from 9.7% in December.

All respondents to the survey evaluated the current U.S. economy as “fair.” In addition, 61.3% of the survey respondents believe that U.S. economic conditions will get better over the next six months, a decrease from 71% in December, while 38.7% of survey respondents indicate they believe the U.S. economy will stay the same and none believe economic conditions in the U.S. will worsen.

In January, 58.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 48.4% in December.

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