Equipment Finance Industry Confidence Up Sharply In January

Washington, DC – The Equipment Leasing & Finance Foundation has released its January 2023 Monthly Confidence Index (MCI-EFI) for the $1 trillion 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. January's index is 48.5, an increase from the December index of 45.9.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “2023 brings uncertainty with a looming recession in front of us, yet robust volume and credit quality continue to be our experience. Being nimble and creative to find solutions will be valuable attributes to have in your organization as we stretch our legs into 2023. Fortunately, this is where the commercial equipment finance industry has excelled and I believe it will once again.” 

January 2023 Survey Results:

The overall MCI-EFI is 48.5, an increase from the December index of 45.9.

• ŸŸŸŸWhen 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 3.7% in December. 69.2% believe business conditions will remain the same over the next four months, up from 55.6% the previous month. 30.8% believe business conditions will worsen, a decrease from 40.7% in December.

• ŸŸŸŸNone of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 7.4% in December. 88.5% believe demand will “remain the same” during the same four-month time period, an increase from 70.4% the previous month. 11.5% believe demand will decline, down from 22.2% in December.

• ŸŸŸŸ11.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 14.8% in December. 73.1% of executives indicate they expect the “same” access to capital to fund business, an increase from 70.4% last month. 15.4% expect “less” access to capital, up from 14.8% the previous month.

• ŸŸŸŸWhen asked, 38.5% of the executives report they expect to hire more employees over the next four months, up from 33.3% in December. 61.5% expect no change in headcount over the next four months, an increase from 51.9% last month. None expect to hire fewer employees, down from 14.8% in December.

• ŸŸŸŸNone of the leadership evaluate the current U.S. economy as “excellent,” down from 3.7% the previous month. 84.6% of the leadership evaluate the current U.S. economy as “fair,” up from 70.4% in December. 15.4% evaluate it as “poor,” a decrease from 25.9% last month.

• ŸŸŸŸ7.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from none in December. 57.7% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 48.2% last month. 34.6% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 51.9% the previous month.

• ŸŸŸŸIn January 23.1% 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. 73.1% believe there will be “no change” in business development spending, up from 59.3% in December. 3.9% believe there will be a decrease in spending, unchanged from last month.

ABOUT THE MCI

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment, and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross-section of industry executives, including large-ticket, middle-market and small-ticket banks, independents, and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

1. Current business conditions
2. Expected product demand over the next four months
3. Access to capital over the next four months
4. Future employment conditions
5. Evaluation of the current U.S. economy
6. U.S. economic conditions over the next six months
7. Business development spending expectations
8. Open-ended question for comment

About The Equipment Leasing & Finance Foundation

The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.