Equipment Finance Industry Confidence Eases In March

Washington, DC – The Equipment Leasing & Finance Foundation (the Foundation) has released its March 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 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 50.3, a decrease from the February index of 51.8.

When asked about the outlook for the future, MCI-EFI survey respondent Nancy Pistorio, Foundation Chair and President, Madison Capital LLC  said, “As the pandemic becomes farther in the rear view mirror, industries affected such as livery, fitness, entertainment, and hospitality are now showing strong demand for equipment.” 

March 2023 Survey Results:

The overall MCI-EFI is 50.3, a decrease from the February index of 51.8.

•  When asked to assess their business conditions over the next four months, 10.7% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 16.1% in February. 57.1% believe business conditions will remain the same over the next four months, down from 61.3% the previous month. 32.1% believe business conditions will worsen, an increase from 22.6 % in February.

•  10.7% 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 9.7% in February. 67.9% believe demand will “remain the same” during the same four-month time period, a decrease from 71% the previous month. 21.4% believe demand will decline, up from 19.4% in February.

•  17.9% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 12.9% in February. 71.4% of executives indicate they expect the “same” access to capital to fund business, a decrease from 74.2% last month. 10.7% expect “less” access to capital, down from 12.9% the previous month.

•  When asked, 35.7% of the executives report they expect to hire more employees over the next four months, a decrease from 38.7% in February. 57.1% expect no change in headcount over the next four months, an increase from 54.8% last month. 7.1% expect to hire fewer employees, up from 6.5% in February.

•  3.7% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 88.9% of the leadership evaluate the current U.S. economy as “fair,” up from 87.1% in February. 7.4% evaluate it as “poor,” a decrease from 12.9% last month.

•  3.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a slight increase from 3.2% in February. 53.6% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 54.8% last month. 42.9% believe economic conditions in the U.S. will worsen over the next six months, an increase from 41.9% the previous month.

•  In March 39.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 51.6% the previous month. 53.6% believe there will be “no change” in business development spending, up from 41.9% in February. 7.1% believe there will be a decrease in spending, up from 6.5% last month.

March 2023 MCI-EFI Survey Comment from Industry Executive Leadership:

Bank, Small Ticket

“Wintrust is well positioned to grow during this time of uncertainty given our strong balance sheet and commitment to the equipment finance space and our customers.”  David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

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.