June 22, 2023 – The Equipment Leasing & Finance Foundation’s (the Foundation) monthly confidence index rose 3.5 points in June.
The index is a qualitative assessment both of the prevailing business conditions and expectations for the future, as reported by key executives from the $1 trillion equipment finance sector.
This month, the index rose to 44.1, an increase 3.5 points from 40.6 in May.
When asked about the outlook for the future, MCI-EFI survey respondent Jonathan Albin, COO of Nexseer Capital, said, “We believe that as banks’ senior credit facility lending tightens, there will be more opportunity for equipment lessors to supply supplemental capital. We are seeing evidence of this today.”
When asked to assess their business conditions over the next four months, 3.3% of responding executives said they believe business conditions will improve over the next four months, an increase from none in May.
73.3% believe business conditions will remain the same over the next four months, up from 51.9% the previous month.
23.3% believe business conditions will worsen, a decrease from 48.2% in May.
6.7% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 3.6% in May.
66.7% believe demand will remain the same during that time, up from 53.6% the previous month.
26.7% believe demand will decline, down from 42.9% in May.
6.7% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 10.7% in May.
76.7% of executives indicate they expect the same access to capital to fund business, an increase from 75% last month.
16.7% expect less access to capital, up from 14.3% the previous month.
13.3% of the executives report they expect to hire more employees over the next four months, down from 17.9% in May.
76.7% expect no change in headcount during that time, up from 67.9% last month.
10% expect to hire fewer employees, down from 14.3% in May.
None of the leaders evaluate the current U.S. economy as “excellent,” unchanged from the previous month.
83.3% of the leadership evaluate the current U.S. economy as “fair,” down from 85.7% in May.
16.7% evaluate it as “poor,” an increase from 14.3% last month.
6.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.6% in May.
40% indicate they believe the U.S. economy will stay the same over the next six months, an increase from 32.1% last month.
53.3% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 64.3% the previous month.
In June, 30% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 35.7% in May.
56.7% believe there will be no change in business development spending, up from 53.6% in May.
13.3% believe there will be a decrease in spending, up from 10.7% last month.
June comments from industry executives:
Bank, Small Ticket
“The equipment leasing and finance industry is resilient and will weather the liquidity shortage that we are currently in, as well as the looming recession. There are and will continue to be opportunities that exist in this environment, and nimble organizations that are capitalized will be well positioned to grow during this period of uncertainty.” David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance
Bank, Middle Ticket
“Businesses need equipment to operate. While business expansion may be limited, the need to replace equipment will remain. Our credit criteria has not changed.” Charles Jones, Senior Vice President, 1st Equipment Finance (FNCB Bank)