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Equipment Lease Finance Industry Confidence Improves in November

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The Equipment Leasing & Finance Foundation says in its November 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) that overall confidence in the equipment finance market is at 56.9, an increase from the October index of 54.0.

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The report says the November index demonstrates an overall steady industry outlook despite continuing concerns about the U.S. economy and the negative impact of federal government fiscal policies. 
Designed to collect leadership data, the index offers a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $827-billion equipment finance sector.

When asked about the outlook for the future, MCI survey respondent Russell Nelson, president, CoBank Farm Credit Leasing, said, “Continued stability and modest growth in the economy combined with increased strength in customer balance sheets, low interest rates and pent-up demand for replacement/new assets for 2014 and beyond will generate double-digit growth for equipment and facility financing over the next 18 to 24 months.”

Here are some of the elements that contributed to the MCI-EFI index of 56.9 for November:

• When asked to assess business conditions over the next four months, 17.2% of executives responding said they believe business conditions will improve over the next four months, up from 11% in October. 79.3% of respondents believe business conditions will remain the same over the next four months, up from 74% in October.  3.4% believe business conditions will worsen, down from 15% who believed so the previous month.

• 13.8% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.4% in October. 75.9% believe demand will “remain the same” during the same four-month time period, down from 77.8% the previous month. 10.3% believe demand will decline, down from 15% who believed so in October.

• 24% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.5% in October. 72.4% of survey respondents indicate they expect the “same” access to capital to fund business, down from 81.8% in October. 3.4% expect “less” access to capital, up from no one who expected less access in October.

• When asked, 27.6% of the executives reported they expect to hire more employees over the next four months, a decrease from 33.3% in October. 65.5% expect no change in headcount over the next four months, down slightly from 66.7% last month. 6.9% expect fewer employees, up from no one who expected fewer employees in October.

• 6.9% of the leadership evaluates the current U.S. economy as “excellent”, up from no one who believed so last month. 75.9% of the leadership evaluates the current U.S. economy as “fair,” down from 85.2% last month. 17.2 % rate it as “poor,” up from 15% in October.

• 17.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from no one who believed so in October. 72.4% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 89% in October. 10.3% believe economic conditions in the U.S. will worsen over the next six months, relatively unchanged from last month.

• In November, 34.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a slight increase from 33.3% in October. 65.5% believe there will be “no change” in business development spending, also a slight increase from 66.7% last month. No one believes there will be a decrease in spending, unchanged from October.

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