Equipment Leasing Industry Confidence Hits All-Time High in January

According to the Equipment Leasing & Finance Foundation’s latest index, confidence in the equipment finance market is 75.3 in January, an increase from 69.4 in December and the highest level since the index was launched in 2009.

When asked about the outlook for the future, survey respondent Valerie Hayes Jester, president of Brandywine Capital Associates, said, “Activity has picked up since the midpoint of the fourth quarter and 2017 closed on a very positive note. The year is off to a great start even with some of the weather issues plaguing the country. I’m hoping the new tax laws will keep this optimism in full gear.”

When asked to assess their business conditions over the next four months, 67.7% of executives said they believe business conditions will improve over the next four months, a marked increase from 32.1% in December. Meanwhile, 29.0% of respondents believe business conditions will remain the same over the next four months, a decrease from 67.9% the previous month, and 3.2% believe business conditions will worsen, up from none who believed so the previous month.

“With the tax bill now being law, this erases some uncertainty and improves business incentives. 2018 could be an excellent year for business investment,” said David T. Schaefer, CEO of Mintaka Financial.

Roughly two thirds (67.7%) of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, an increase from 46.4% in December. In contrast, 29.0% believe demand will remain the same during the same four-month time period, down from 53.6% the previous month. A meager 3.2% believe demand will decline, although that does mark an increase from none who believed so in December.

“The improved tax climate, low interest rates, almost full employment and increasing corporate profitability all support higher levels of equipment acquisition,” said Harry Kaplun, president of Specialty Finance for Frost Bank.

There was a rise to 35.5% of the respondents who expect more access to capital to fund equipment acquisitions over the next four months, up from 25.0% in December. The majority (61.3%) of executives indicated they expect the same access to capital to fund business, a decrease from 67.9% last month. Only 3.2% expect less access to capital, down from 7.1% last month.

“I believe that the tax reform legislation will provide a short-term boost to capex spending. However, I am less optimistic that tax reform will be a long-term positive for our economy,” said Paul Menzel, president and CEO of Financial Pacific Leasing.

When asked, 41.9% of the executives reported they expect to hire more employees over the next four months, a decrease from 53.6% in December. Most (54.8%) expect no change in headcount over the next four months, an increase from 46.4% last month, while 3.2% expect to hire fewer employees, an increase from none in December.

About a quarter (25.8%) of the leadership evaluated the current U.S. economy as excellent, up from 10.7% last month. The large majority (74.2%) of the leadership evaluated the current U.S. economy as fair, a decrease from 89.3% in December. None evaluated it as poor, unchanged from last month.

“The passing of tax reform as well as the continued easing of the burdensome regulatory environment have created additional optimism in the business communities that we serve,” said Dave B. Fate, president and CEO of Stonebriar Commercial Finance.

Most (61.3%) of the survey respondents believe that U.S. economic conditions will get better over the next six months, an increase from 42.9% in December. In comparison, 38.7% of survey respondents indicated they believe the U.S. economy will stay the same over the next six months, a decrease from 57.1% the previous month. None believe economic conditions in the U.S. will worsen over the next six months, unchanged from December.

In January, 61.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 57.1% in December. In addition, 35.5% believe there will be no change in business development spending, a decrease from 42.9% the previous month, while 3.2% believe there will be a decrease in spending, an increase from none last month.

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