Equipment finance industry confidence wanes

The Equipment Leasing & Finance Foundation (the Foundation) has released the February 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of current business conditions and expectations for the future, as reported by top executives in the $900 billion equipment finance industry. Overall, confidence in the equipment finance market is 61.8, down from January’s index of 63.9.

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Asked about the outlook for the future, James D. Jenks, CEO of Global Finance and Leasing Services LLC, responding to the MCI-EFI survey, said, “The equipment finance industry is strong right now. With inflation, we will experience increases in the cost of money. With the rising cost of money, we are going to experience a downturn in the economy and delinquencies will increase.

February 2022 Survey Results

The overall MCI-EFI is 61.8, down from January’s index of 63.9.

• When asked to rate their business conditions over the next four months, 24.1% of responding executives said they believe business conditions will improve over the next four months, down from compared to 25.9% in January. 69% believe trading conditions will remain the same over the next four months, up from 70.4% the previous month. 6.9% think economic conditions will deteriorate, up from 3.7% in January.

• 24.1% of respondents believe the demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 25.9% in January. 72.4% believe demand will “stay the same” over the same four-month period, up from 70.4% the previous month. 3.5% believe demand will decline, unchanged from January.

• 17.2% of respondents expect greater access to capital to finance equipment acquisitions over the next four months, compared to 21.4% in January. 82.8% of executives say they expect the “same” access to capital to fund their businesses, up from 78.6% last month. None expect “less” access to capital, unchanged from the previous month.

• Surveyed, 44.8% of executives say they expect to hire more employees over the next four months, up from 39.3% in January. 55.2% expect no change in the workforce over the next four months, down from 60.7% last month. None expect to hire fewer employees, unchanged from January.

• 10.3% of executives rate the current US economy as “excellent”, down from 14.8% the previous month. 86.2% of executives rate the current US economy as “fair,” up from 81.5% in January. 3.5% rate it as “poor”, unchanged from last month.

• 24.1% of survey respondents believe that US economic conditions will improve over the next six months, down from 29.6% in January. 58.6% say they think the US economy will “stay the same” over the next six months, down from 63% last month. 17.2% believe that economic conditions in the United States will deteriorate over the next six months, an increase from 7.4% the previous month.

• In February, 44.8% of respondents said they thought their company would increase its spending on business development activities in the next six months, up from 50% the previous month. 51.7% believe there will be “no change” in business development spending, up from 50% in January. 3.5% think there will be a decrease in spending, compared to none last month.

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