Confidence in the equipment finance sector eases in December
Washington, DC, December 16, 2021 -The Foundation for leasing and financing of equipment (the Foundation) publishes on December 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index presents a qualitative assessment of both current business conditions and expectations for the future, as reported by key executives in the $ 900 billion equipment finance industry. Overall, confidence in the equipment finance market is 63.9, down from the November index of 64.6.
Asked about the future prospects, the respondent to the MCI-EFI survey Daniel J. Krajewski, President and CEO, Sertant Capital, LLC, said: âThe near-term future of the equipment finance industry is bright for continued expansion. As the infrastructure bills are passed and implemented, there will be demand for many asset classes, from construction to IT platforms. This, of course, will have to be backed up by increased manufacturing capacity to build all the necessary capital goods. I am concerned about the political atmosphere that currently exists in the United States that could slow or even kill the entire infrastructure bill, and second, the supply chain issues that have hampered the product delivery system. . ”
December 2021 survey results:
The overall MCI-EFI index is 63.9, down from the November index of 64.6.
When asked to rate their business conditions over the next four months, 34.6% of executives surveyed said they believed business conditions would improve over the next four months, with no change from to November. 61.5% believe trading conditions will stay the same over the next four months, up from 46.2% the month before. 3.9% believe that the economic situation will deteriorate, against 19.2% in November.
26.9% of respondents believe demand for leases and loans to finance capital spending (capex) will increase over the next four months, up from 42.3% in November. 73.1% believe demand will “stay the same” over the same four-month period, up from 50% the month before. No one thinks demand will drop, down from 7.7% in November.
19.2% of respondents expect increased access to capital to finance equipment acquisitions over the next four months, up from 26.9% in November. 80.8% of executives say they expect the âsameâ access to capital to finance their operations, up from 73.1% last month. None expects “less” access to capital, unchanged from the previous month.
When asked, 42.3% of executives say they expect to hire more employees in the next four months, up from 53.9% in November. 57.7% do not expect any change in headcount in the next four months, an increase from 46.2% last month. None expect to hire fewer employees, unchanged from November.
19.2% of executives rate the current US economy as “excellent,” up from 15.4% the month before. 76.9% of executives believe that the current US economy is “fair”, against 80.8% in November. 3.9% assess it as “poor”, unchanged from last month.
19.2% of those polled believe U.S. economic conditions will improve over the next six months, down from 23.1% in November. 61.5% say they think the US economy will “stay the same” for the next six months, an increase from 57.7% last month. 19.2% believe economic conditions in the United States will deteriorate over the next six months, unchanged from the previous month.
In December, 46.2% of those polled said they believed their company would increase spending on business development activities over the next six months, up from 42.3% the month before. 53.9% believe there will be “no change” in business development spending, up from 57.7% in November. None believe there will be a decrease in spending, unchanged from last month.
Comments from the December 2021 MCI-EFI survey of industry executives:
Bank, Medium Ticket
âThe demand for capital spending remains robust. Customers are looking to alleviate labor shortage issues through automation. We believe this trend will continue through 2022 and 2023. Supply chain head winds continue to thwart automation plans. ” Michel Romanowski,President, Agricultural Leasing
âThe demand for loans and equipment rentals remains strong in almost all sectors. Large US corporations are turning to fixed rate financing as a strategy to mitigate the impact of inflation. ” Alain Sikora, CLFP, CEO, First American, an RBC / City National Company
âOur customers remain resilient, fueling the pandemic, supply chain issues and inflation to meet their goals. Key remains vigilant that the continuing battle against Covid will ultimately reduce the risk to our customers and our economy. ” Adam Warner, President, Key Equipment Financing
Independent ticket, medium
âThere is still plenty of liquidity in the markets and productivity continues to thrive. The impact of inflation and upcoming rate hikes could put a stop to it, but we continue to see strong demand on capital spending. The biggest hurdle is the protracted supply chain disruptions, but it’s encouraging to see organizations transforming to tackle them in innovative ways by 2022. ” Aylin Cankardes, President, Rockwell Financial Group
Why an MCI-EFI?
Confidence in the US economy and capital markets is a critical driver for the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more likely to acquire more consumer goods, equipment and durable goods, and to invest at prevailing prices. When confidence wanes, spending and risk taking tend to go down. It is said that investors are confident when news about the future is good and stock prices rise.
Who participates in MCI-EFI?
Interviewees are made up of a wide range of industry executives, including large, medium and small note banks, independents, and captive equipment finance companies. MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the integrity of the survey. Since the same organizations are providing the data from month to month, the results provide a consistent barometer of industry confidence.
How is MCI-EFI designed?
The survey consists of seven questions and a comment box, asking for respondents’ opinions on the following:
Current business conditions
Product demand expected over the next four months
Access to capital over the next four months
Future employment conditions
Assessment of the current US economy
US economic conditions over the next six months
Business Development Expenditure Forecast
Question open for comment
How can I access MCI-EFI?
The results of the survey are posted on the Foundation’s website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation’s electronic forecast bulletin, and included in press releases. Demographics of survey respondents and additional information on MCI are also available at the link above.
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The Equipment Leasing & Finance Foundation is a 501c3 not-for-profit organization that powers the equipment finance industry and its people with industry-specific knowledge, information and programs that help drive innovation. industry, individual careers and the overall improvement of the equipment leasing and finance industry. The Foundation is funded by charitable donations from individuals and businesses. Learn more about www.leasefoundation.org.