The Equipment Leasing & Finance Foundation (the Foundation) has released the May 2023 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 $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 40.6, a decrease from the April index of 47.0.
When asked about the outlook for the future, MCI-EFI survey respondent James D. Jenks, CEO, Global Finance and Leasing Services, LLC, said, “Until we get back to energy independence, I don’t see an uptick in the economy in the foreseeable future.”
When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 11.1% in April. And 51.9% believe business conditions will remain the same over the next four months, down from 70.4% the previous month. However, 48.2% believe business conditions will worsen, an increase from 18.5 % in April.
Of those responding, 3.6% believe demand for leases and loans to fund capital expenditures will increase over the next four months, unchanged from April; 53.6% believe demand will “remain the same” during the same four-month time period, a decrease from 70.4% the previous month; and 42.9% believe demand will decline, up from 25.9% in April.
Also, 10.7% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 7.4% in April; 75% of executives expect the “same” access to capital to fund business, a decrease from 77.8% last month; and 14.3% expect “less” access to capital, down from 14.8% the previous month.
When asked, 17.9% of the executives report they expect to hire more employees over the next four months, a decrease from 33.3% in April; 67.9% expect no change in headcount over the next four months, an increase from 51.9% last month; and 14.3% expect to hire fewer employees, down from 14.8% in April.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month, while 85.7% of the leadership evaluate the current U.S. economy as “fair,” down from 88.9% from April. The economy was evaluated as “poor” by 14.3% of those responding, an increase from 11.1% last month.
U.S. economic conditions will get “better” over the next six months according to 3.6% of the survey respondents, a decrease from 7.4% in April; 32.1% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 48.2% last month; and 64.3% believe economic conditions in the U.S. will worsen over the next six months, an increase from 44.4% the previous month.
In May 35.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37% the previous month; 53.6% believe there will be “no change” in business development spending, up from 44.4% in April; and 10.7% believe there will be a decrease in spending, down from 18.5% last month.
