Equipment Leasing and Finance Industry Confidence Dips in March Amid Uncertainty Around Coronavirus
March 18, 2020 - The Equipment Leasing & Finance Foundation has released the March 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market in March is 46.0, a decrease from the February index of 58.7.
When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president, Brandywine Capital Associates, said, “The fundamentals of our economy continue to be strong. The current events in the worldwide markets and the impact of COVID-19 are impacting the very near term. Business demand for equipment finance is always based on the long-term perspectives of the commercial sectors, and I do not believe that pessimism is the predominant emotion in our customer base. Two-thousand-nineteen was a strong year, and I have no reason to believe that demand will not continue to increase in the future. I did not agree with the Federal Reserve’s action of lowering rates, and I don’t believe that the decrease will have any impact on the equipment acquisition decisions of small businesses.”
March 2020 Survey Results:
• When asked to assess their business conditions over the next four months, 3.7% of executives responding said they believe business conditions will improve over the next four months, down from 11.5% in February. Then, 48.2% of respondents believe business conditions will remain the same over the next four months, a decrease from 84.6% the previous month, and 48.2% believe business conditions will worsen, an increase from 3.9% in February.
• Next, 3.7% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 7.7% in February. And 59.3% believe demand will “remain the same” during the same four-month time period, a decrease from 88.5% the previous month, while 37% believe demand will decline, an increase from 3.9% in February.
• Then, 14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 19.2% in February. Next, 77.8% of executives indicate they expect the “same” access to capital to fund business, an increase from 76.9% last month, and 7.4% expect “less” access to capital, an increase from 3.9% the previous month.
• When asked, 29.6% of the executives report they expect to hire more employees over the next four months, a decrease from 30.8% in February. Next, 66.7% expect no change in headcount over the next four months, an increase from 61.5% last month, and lastly, 3.7% expect to hire fewer employees, down from 7.7% the previous month.
• Then, 18.5% of the leadership evaluate the current U.S. economy as “excellent,” down from 38.5% the previous month, while 77.8% of the leadership evaluate the current U.S. economy as “fair,” up from 61.5% in February. Lastly, 3.7% evaluate it as “poor,” up from none last month.
• When asked, 14.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 4% in February. Thirty-seven percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 88% last month, and 48.2% believe economic conditions in the U.S. will worsen over the next six months, up from 8% the previous month.
• In March, 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 50% last month. While 70.4% believe there will be “no change” in business development spending, up from 42.3% in February, only 7.4% believe there will be a decrease in spending, relatively unchanged from 7.7% last month.