Equipment finance industry confidence improves again in February

The Equipment Leasing & Finance Foundation released its February 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today, which reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 51.8, an increase from the January index of 48.5.

When asked about the outlook for the future, MCI-EFI survey respondent Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc., said, “We still see pent-up demand in the light and medium-duty segment of transportation. However, we feel it will wane by the third or fourth quarter of this year.”

February 2023 Survey highlights include:

• When asked to assess their business conditions over the next four months, 16.1% of the executives responding said they believe business conditions will improve over the next four months, an increase from none in January. 61.3% believe business conditions will remain the same over the next four months, down from 69.2% the previous month. 22.6% believe business conditions will worsen, a decrease from 30.8 % in January.
• 9.7% 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 none in January. 71% believe demand will “remain the same” during the same four-month time period, a decrease from 88.5% the previous month. 19.4% believe demand will decline, up from 11.5% in January.
• 12.9% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 11.5% in January. 74.2% of executives indicate they expect the “same” access to capital to fund business, an increase from 73.1% last month. 12.9% expect “less” access to capital, down from 15.4% the previous month.
• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 87.1% of the leadership evaluate the current U.S. economy as “fair,” up from 84.6% in January. 12.9% evaluate it as “poor,” a decrease from 15.4% last month.
• 3.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 7.7% in January. 54.8% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7% last month. 41.9% believe economic conditions in the U.S. will worsen over the next six months, an increase from 34.6% the previous month.
• In February 51.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 23.1% the previous month. 41.9% believe there will be “no change” in business development spending, down from 73.1% in January. 6.5% believe there will be a decrease in spending, up from 3.9% last month.

In comments from Industry Executive Leadership, James D. Jenks, CEO, Global Finance and Leasing Services, LLC, representing the Independent, Small Ticket segment noted that, “Recession is likely staying on the sidelines as long as there is a shortage of employees to fill open job positions.”