Equipment Finance Industry Confidence Eases in September

The Equipment Leasing & Finance Foundation released the September 2022 Monthly Confidence Index for the Equipment Finance Industry. 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 is 48.7, a decrease from the August index of 50.

When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, president, FSG Capital, Inc., said, “The Fed has made it crystal clear that bringing inflation back to target is its number one goal. More increases to the Fed funds rate are coming, as is quantitative tightening to the tune of $95 billion per month. Highly leveraged participants in our industry will pay the price, as well as highly leveraged borrowers/lessees. While the definition of a true recession is being hotly debated, there is little doubt that more challenging times are ahead and the hopes of a ‘soft landing’ are much less.”

September 2022 survey results:

When asked to assess their business conditions over the next four months, 3.6% of executives responding said they believe business conditions will improve over the next four months, a decrease from 14.8% in August. Seventy-five percent believe business conditions will remain the same over the next four months, up from 51.9% the previous month and 21.4% believe business conditions will worsen, a decrease from 33.3% in August.

Approximately 11% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 7.7% in August; 71.4% believe demand will “remain the same” during the same four-month time period, a decrease from 76.9% the previous month and 17.9% believe demand will decline, up from 15.4% in August.

A little more than 14% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 7.4% in August; 71.4% of executives indicate they expect the “same” access to capital to fund business, a decrease from 85.2% last month and 14.3% expect “less” access to capital, up from 7.4% the previous month.

When asked, 28.6% of the executives report they expect to hire more employees over the next four months, up from 25.9% in August; 64.3% expect no change in headcount over the next four months, a decrease from 74.1% last month and 7.1% expect to hire fewer employees, up from none in August.

Seven percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from none the previous month; 71.4% of the leadership evaluate the current U.S. economy as “fair,” down from 85.2% in August and 21.4% evaluate it as “poor,” an increase from 14.8% last month.

Seven percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 11.1% in August; 39.3% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 51.9% last month and 53.6% believe economic conditions in the U.S. will worsen over the next six months, an increase from 37% the previous month.

In September, 28.6% of respondents indicated they believe their company will increase spending on business development activities during the next six months, down from 29.6% the previous month; 71.4% believe there will be “no change” in business development spending, up from 70.4% in August and none believe there will be a decrease in spending, unchanged from last month.