Equipment finance confidence holds steady in January
According to the Equipment Leasing & Finance Foundation’s January 2022 Monthly Confidence Index for the equipment finance industry, overall confidence in the equipment finance market is 63.9, unchanged from the December 2021 index.
Asked about the outlook for the future, survey respondent Jim DeFrank, Executive Vice President and Chief Operating Officer of Isuzu Finance of America, said, “It’s all about the supply chain moment. There is a demand for equipment, but manufacturers are struggling to meet the demand due to parts shortages, labor issues, etc. Once supply can match demand, we will see a nice increase in financing and leasing volumes, hopefully by the second half of the year. of 2022.”
When asked to rate their business conditions over the next four months, 25.9% of executives who responded said they believed business conditions would improve over the next four months, down from from 34.6% in December, while 70.4% believe that business conditions will remain the same over the next four months. over the next four months, down from 61.5% last month, and 3.7% believe business conditions will deteriorate, unchanged from December.
“As the seemingly endless pandemic fueled by the omicron variant wreaks havoc in some sectors, the industry had a strong year in fiscal year 2021 and is poised to thrive again in the coming months. fiscal year 2022,” said Bruce J. Winter, president of FSG. Capital, said. “Strong underwriting will be rewarded, and those who have taken too much risk may start to feel the impact of deteriorating portfolio performance as government stimulus measures wear off. Competition will keep spreads tight, but rising costs of funds will force lenders to slowly increase prices throughout the year.
Around a quarter (25.9%) of respondents believe that demand for leases and loans to finance capital expenditure (capex) will increase over the next four months, up from 26.9% in December, while 70, 4% believe that demand will “stay the same”. over the same four-month period, down from 73.1% last month, and 3.7% believe demand will decline, compared to none in December.
“Supply chain issues continue to be our biggest headwind. With the Fed predicting higher interest rates, we expect customers to secure long-term financing at today’s low rates.” today,” said Michael Romanowski, president of Farm Credit Leasing.
In January, 21.4% of respondents said they expected increased access to capital to finance equipment acquisitions over the next four months, up from 19.2% in December, while 78.6% of executives indicated that they expect the “same” access to capital to finance businesses. , down from 80.8% last month. None of the respondents expect “less” access to capital, unchanged from last month.
Surveyed, 39.3% of executives said they plan to hire more employees in the next four months, up from 42.3% in December, while 60.7% do not foresee any headcount changes in the over the next four months, up from 57.7% last month. None of the respondents said they expected to hire fewer employees over the next four months, unchanged from December.
This month, 14.8% of respondents rated the current U.S. economy as “excellent,” down from 19.2% last month, while 81.5% of respondents rated the current US economy as “fair,” down from 76.9% in December, and 3.7% rated it as “poor,” unchanged from a month ago.
When polled, 29.6% of survey respondents said they believed U.S. economic conditions would improve over the next six months, an increase from 19.2% in December, while 63% said thought the US economy would “stay the same” for the next six months. next six months, an increase from 61.5% last month, and 7.4% believe economic conditions in the United States will deteriorate over the next six months, down from 19.2% last month.
In January, 50% of respondents said they believe their company will increase spending on business development activities in the next six months, up from 46.2% last month. The other half (50%) believe there will be “no change” in business development spending, up from 53.9% in December. None of the respondents believe there will be a decrease in business development spending, unchanged from last month.
“2022 will be an interesting year with many challenges and headwinds that will create opportunities for organizations that are well positioned and nimble enough to take advantage of them,” said David Normandin, CLFP, President and CEO of Wintrust Specialty Finance.