The monthly index for the equipment finance industry was up roughly four points in June, the Equipment Leasing & Financing Foundation announced today. That means executives from the equipment finance sector believe that business conditions will improve over the next quarter, CapEx leases and loans will increase, and they expect to have more access to capital to fund equipment acquisitions.
The foundation released the June 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. 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 44.1, an increase from the May index of 40.6.
“We believe that as banks’ senior credit facility lending tightens, there will be more opportunity for equipment lessors to supply supplemental capital. We are seeing evidence of this today," said survey respondent Jonathan Albin, COO of Nexseer Capital.
According to the foundation: the overall MCI-EFI is 44.1, an increase from the May index of 40.6.
- When asked to assess their business conditions over the next four months, 3.3% of the executives responding said they believe business conditions will improve over the next four months, an increase from none in May. 73.3% believe business conditions will remain the same over the next four months, up from 51.9% the previous month. 23.3% believe business conditions will worsen, a decrease from 48.2% in May.
- 6.7% 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 3.6% in May. 66.7% believe demand will “remain the same” during the same four-month time period, an increase from 53.6% the previous month. 26.7% believe demand will decline, down from 42.9% in May.
- 6.7% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 10.7% in May. 76.7% of executives indicate they expect the “same” access to capital to fund business, an increase from 75% last month. 16.7% expect “less” access to capital, up from 14.3% the previous month.
- When asked, 13.3% of the executives report they expect to hire more employees over the next four months, a decrease from 17.9% in May. 76.7% expect no change in headcount over the next four months, an increase from 67.9% last month. 10% expect to hire fewer employees, down from 14.3% in May.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 83.3% of the leadership evaluate the current U.S. economy as “fair,” down from 85.7% in May. 16.7% evaluate it as “poor,” an increase from 14.3% last month.
- 6.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 3.6% in May. 40% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 32.1% last month. 53.3% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 64.3% the previous month.
- In June 30% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 35.7% the previous month. 56.7% believe there will be “no change” in business development spending, up from 53.6% in May. 13.3% believe there will be a decrease in spending, up from 10.7% last month.
“Businesses need equipment to operate. While business expansion may be limited, the need to replace equipment will remain. Our credit criteria has not changed,” Charles Jones, senior vice president, 1st Equipment Finance (FNCB Bank), reported in the survey.
Read the report here.
