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Equipment Lease Finance Industry Confidence Dips in May

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Confidence in the equipment finance market was at 59.2 in May, down slightly from the April index of 62.1, reflecting uncertainty about the pace of U.S. economic growth and concerns about global political and economic factors.

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The latest information comes from Equipment Leasing & Finance Foundation (the Foundation) in its May 2012 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).

Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $628-billion equipment finance sector.

The May 2012 survey results include:

• The overall MCI-EFI is 59.2, down from the April index of 62.1.

• When asked to assess their business conditions over the next four months, 17.1% of executives responding said they believe business conditions will improve, down from 23.5% in April.

• 77.1% of respondents believe business conditions will remain the same over the next four months, up from 76.5% in April. 5.7% believe business conditions will worsen, up from none the previous month.

• 20% of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, a decrease from 23.5% in April. 77.1% believe demand will remain the same during the same four-month time period, up from 76.5% the previous month. 2.9% believe demand will decline, up from none in April.

• 25.7% of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 26.5% in April. 74.3% of survey respondents indicate they expect the same access to capital to fund business, an increase from 73.5% the previous month. No survey respondents expect less access to capital, unchanged from April.

• 31.4% of the executives reported they expect to hire more employees over the next four months, down from 32.4% in April. 62.9% expect no change in headcount over the next four months, a decrease from 67.6% last month, while 5.7% expect fewer employees, up from none in April.

• 88.6% of the leadership evaluates the current U.S. economy as “fair,” up slightly from 88.2% last month. 11.4% rate it as “poor,” down slightly from 11.8% in April.

• 22.9% of survey respondents believe that U.S. economic conditions will get better over the next six months, down from 29.4% in April. 65.7% of survey respondents indicate they believe the U.S. economy will stay the same over the next six months, down from 70.6% in April. 11.4% believe economic conditions in the U.S. will worsen over the next six months, an increase from none who believed so last month.

• In April, 37.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 35.3% in April. 62.9% believe there will be no change in business development spending, down from 64.7% last month, and no one believes there will be a decrease in spending, unchanged from last month.

When asked about the outlook for the future, MCI survey respondent Russ Nelson, President, Farm Credit Leasing, said, “Demand for loans and leases in the industries we serve remains closely tied to external economic factors and conditions, many of which remain volatile and uncertain for the remainder of 2012. Year-to-date activity for equipment has remained strong and we are cautiously optimistic concerning the next eight months.”


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