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Equipment Lease Finance Industry Confidence Improved in July

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The Equipment Leasing & Finance Foundation’s July 2012 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) shows that, overall, confidence in the equipment finance market is at 51.5, up from the June index of 48.5, and reflects continuing concern over external economic factors and regulatory and political uncertainty.

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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.

July 2012 Survey Results
The overall MCI-EFI is 51.5, up from the June index of 48.5. When asked to assess their business conditions over the next four months, 6.5% of executives responding said they believe business conditions will improve over the next four months, down from 8.1% in June. 71% of respondents believe business conditions will remain the same over the next four months, up from 64.9% in June. 22.6% believe business conditions will worsen, down from 27% the previous month.

• 12.9% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 8.1% in June. 71% believe demand will “remain the same” during the same four-month time period, up from 64.9% the previous month. 16.1% believe demand will decline, down from 27% in June.

• 19.4% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 10.8% in June. 77.4% of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 86.5% the previous month. 3.2% survey respondents expect “less” access to capital, up from 2.7% who expected less access in June.

• When asked, 35.5% of the executives reported they expect to hire more employees over the next four months, up from 24.3% in June. 64.5% expect no change in headcount over the next four months, virtually unchanged from 64.9% last month, while no one expects fewer employees, down from 10.8% in June.

• 71% of the leadership evaluates the current U.S. economy as “fair,” down from 78.4% last month. 29% rate it as “poor,” up from 21.6% in June.

• 9.7% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 8.1% in June. 71% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, up from 64.9% in June. 19.4% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 27% who believed so last month.

• In July, 25.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 29.7% in June. 71% believe there will be “no change” in business development spending, up slightly from 70.3% last month, and 3.2% believe there will be a decrease in spending, up from no one who believed so last month.

When asked about the outlook for the future, MCI survey respondent Russell D. Nelson, president, Farm Credit Leasing Services Corp., said, “Continued volatility and uncertainty at home and abroad may inhibit planned or needed capital expenditures during the next six months, but low interest rates and tax incentives will enable our industry to generate modest increases in asset volume and profitability through the remainder of 2012.”  He added, “Improving credit quality, stable earnings and demand for creative lease and loan products should position our industry for improved growth in 2013 and beyond.”

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