Equipment Finance Confidence Improves in August
According to the Equipment Leasing & Finance Foundation’s Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) August 2022, overall confidence in the equipment finance market is 50, an increase compared to the July index of 46.1.
“The resilience of the equipment leasing and finance industry continues to show in 2022,” said Dave Fate, CEO of Stonebriar Commercial Finance. “Over the decades, the industry has weathered and thrived through recessions, a financial crisis and a global health pandemic. We are all now facing the challenges of supply chain disruption, inflation, labor shortages and the “noise” that accompanies the upcoming midterm elections just months away. Regardless of these challenges, the industry is still performing well. Speaking on behalf of Stonebriar Commercial Finance, I am pleased to report that SCF is at record pace in terms of business volume and profitability this year, and that our portfolio continues to perform exceptionally well.
When asked to rate their business conditions over the next four months, 14.8% of executives said they believed business conditions would improve over the next four months, an increase from 3.7% in July, while 51.9% believed trading conditions would remain the same over the next four months. next four months, down from 63% last month, and 33.3% believe business conditions will deteriorate, unchanged from July.
Only 7.7% of survey respondents believe that demand for leases and loans to finance capital expenditure (capex) will increase over the next four months, compared to 11.1% in July. Most respondents (76.9%) believe demand will “stay the same” over the same four-month period, an increase from 55.6% last month, while 15.4% believe that demand will decline, down from 33.3% in July.
“We have a number of major projects that will be completed by the end of the year, which will result in solid year-on-year growth. Many of these projects have been delayed due to supply chain issues over the past year,” said Michael Romanowski, president of Farm Credit Leasing. “The future is a bit cloudy, with talk of recession and inflation still hot. That said, clients are still looking to lock in historically low rates to fund large capital investments.
According to the index, 7.4% of respondents expect increased access to capital to finance equipment acquisitions over the next four months, up from 11.1% in July. Meanwhile, 85.2% of executives said they expect the “same” access to capital to fund their businesses, up from 81.5% last month, and 7.4% expect “less” access to capital, unchanged from July.
Surveyed, 25.9% of executives said they plan to hire more employees in the next four months, up from 18.5% in July. Meanwhile, 74.1% expect no headcount changes over the next four months, down from 77.8% last month. None of the respondents expect to hire fewer employees, compared to 3.7% in July.
None of the executives rated the current US economy as “excellent”, down from 11.1% last month. Instead, 85.2% of executives rated the current US economy as ‘fair’, down from 77.8% in July, while 14.8% rated it as ‘bad’, down from 11.1. % last month.
“The commercial equipment finance business remains strong and nimble. As we see continued high inflation rates and the Fed continuing to raise rates, we will adapt and find solutions to meet the needs of our clients,” said David Normandin, CLFP, President and CEO of the management of Wintrust Specialty Finance. “Throughout this period, I reflect on the performance of the portfolio and the potential challenges that many of our clients will face. Staying focused on supporting our customers through change is valuable for us to continue to grow. »
According to the index, 11.1% of respondents believe economic conditions in the United States will improve over the next six months, up from 7.4% in July. Still, 51.9% said they believe the U.S. economy will “stay the same” over the next six months, an increase from 40.7% last month, while 37% believe conditions Economic growth in the United States will deteriorate over the next six months, down from 51.9% last month.
In August, 29.6% of respondents said they believed their company would increase its spending on business development activities in the next six months, up from 22.2% the previous month. Meanwhile, 70.4% believe there will be “no change” in business development spending, up from 74.1% in July. None of the respondents think there will be a decrease in spending, compared to 3.7% last month.
“Growth opportunities remain significant for businesses that understand their customers,” said Alan Sikora, CEO of First American Equipment Finance, an RBC/City National Company. “As customers face uncertainty, sophisticated and creative equipment leasing and finance companies will add value and thrive.”