According to the March 2018 Monthly Confidence Index from the Equipment Leasing & Finance Foundation, confidence in the equipment finance market is 72.2 in March, easing slightly from 73.2 in February.

“We are seeing growth in capex spending across a broad segment of the economy. While some areas are expanding more quickly than others, all are moving in a positive direction,” said Anthony Cracchiolo, president and CEO of U.S. Bank Equipment Finance. “Businesses are more positive then we have seen in over a decade and activity is picking up momentum. The equipment finance industry is healthy and poised to support the expanding economy.”

When asked to assess their business conditions over the next four months, 54.8% of executives responding said they believe business conditions will improve over the next four months, an increase from 46.4% in February. Almost half (45.2%) of the respondents believe business conditions will remain the same over the next four months, a decrease from 53.6% the previous month. None believe business conditions will worsen, unchanged from the previous month.

A little more than two-thirds (67.7%) of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, unchanged from February. The remaining respondents (32.3%) believe demand will remain the same during the same four-month time period, relatively unchanged from 32.1% the previous month. None believe demand will decline, also unchanged from February.

“In spite of the gyrations of the stock market, our customers seem poised to grow their businesses. We have experienced more demand for expansion projects in the last few months than in all of 2017,” said Valerie Hayes Jester, president of Brandywine Capital Associates. “That type of optimism fuels a strong demand for financing products. Tax reform and interest rates that continue to be favorable, in spite of increases recently, should create strong growth for 2018.”

Only 22.6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 28.6% in February. The majority (74.2%) of executives indicated they expect the same access to capital to fund business, an increase from 67.9% last month, while 3.2% expect less access to capital, down slightly from 3.6% last month.

“We are still experiencing customers digesting the tax reform changes and how this will impact their decisions on buy vs lease,” said Michael Romanowski, president of Farm Credit Leasing Services. “In some cases, this has delayed purchasing decisions or project start dates.”

When asked, 41.9% of the executives reported they expect to hire more employees over the next four months, a decrease from 42.9% in February. A slight majority (51.6%) expect no change in headcount over the next four months, a decrease from 53.6% last month. Meanwhile, 6.5% expect to hire fewer employees, up from 3.6% in February.

There was a rise to 29.0% of the leadership which evaluated the current U.S. economy as excellent, up from 25.0% last month. The majority (71.0%) of the leadership evaluated the current U.S. economy as fair, down from 75.0% in February. None evaluate it as poor, unchanged from last month.

However, 45.2% of the survey respondents believe that U.S. economic conditions will get better over the next six months, a decrease from 60.7% in February. A small majority (51.6%) of survey respondents indicated they believe the U.S. economy will stay the same over the next six months, an increase from 35.7% the previous month. Only 3.2% believe economic conditions in the U.S. will worsen over the next six months, a slight decrease from 3.6% in February.

“Tax reform, market optimism, and a 17-year low unemployment rate are all reasons that I am confident in the economy and our specific segment of the market,” said David Normandin, managing director of the Commercial Finance Group for Hanmi Bank. “While rising interest rates are good for our business in the long term, in the short term it is a challenge to keep pace in the market given robust competition.”

In March, 51.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 53.6% in February. In comparison, 45.2% believe there will be no change in business development spending, a decrease from 46.4% the previous month, while 3.2% believe there will be a decrease in spending, an increase from none who believed so last month.