The February Confidence Index from the Equipment Leasing & Finance Foundation says that confidence in the equipment finance market is at 66.3, a slight increase from the three-year high level reached by the January index of 66.1.
The index is designed to collect leadership data on prevailing business conditions and expectations for the future as reported by key executives from the $903-billion equipment finance sector.
Here is a summary of the February survey results:
• When asked to assess their business conditions over the next four months, 30.3% of equipment finance executives who responded said they believe business conditions will improve over the next four months, up from 23.3% in January. 63.6% of respondents believe business conditions will remain the same over the next four months, down from 76.7% in January. 6.1% believe business conditions will worsen, up from none who believed so the previous month.
• 42.4% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 20% in January. 51.5% believe demand will “remain the same” during the same four-month time period, down from 80% the previous month. 6.1% believe demand will decline, up from none in January.
• 27.3% of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 33.3% in January. 72.7% of survey respondents indicate they expect the “same” access to capital to fund business, up from 66.7% in January. None expects “less” access to capital, unchanged from the previous month.
• When asked, 39.4% of the executives reported they expect to hire more employees over the next four months, a decrease from 50% in January. 57.6% expect no change in headcount over the next four months, up from 50% last month. 3% expect to hire fewer employees, up from none who expected fewer in January.
• 6.1% of the leadership evaluate the current U.S. economy as “excellent,” up from 3% last month. 90.9% of the leadership evaluates the current U.S. economy as “fair,” down from 97% in January. 3% rate it as “poor,” up from none the previous month.
• 45.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 43.3% who believed so in January. 54.6% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 56.7% in January. None believes economic conditions in the U.S. will worsen over the next six months, unchanged from last month.
• In February, 48.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 50% in January. 51.5% believe there will be “no change” in business development spending, an increase from 50% last month. None believes there will be a decrease in spending, unchanged from last month.
When asked about the outlook for the future, MCI-EFI survey respondent William Verhelle, CEO of First American Equipment Finance, a City National Bank Co., said, “The economy continues to improve. First American is seeing increased equipment acquisition activity among the large corporate borrowers we serve. We are optimistic that lower energy costs, if they remain at current low levels, will drive increased U.S. economic activity in the second half of 2015. We are more optimistic about the U.S. economy today than we have been at any time during the past six years.”
“Demand remains moderate and competition is strong,” said David Schaefer, CEO, Mintaka Financial LLC. “We remain bullish for 2015 as we expand channels and products. We are planning on muted GDP so we are focused on making our own opportunities versus waiting for the general economy to expand.”