Equipment Finance Industry Confidence Steady In June

Washington, DC – The Equipment Leasing & Finance Foundation (the Foundation) has released its June 2024 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 50.2, steady with the May index of 50.7.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “The stress the industry is experiencing in small business lending continues with elevated bankruptcy, delinquency, and a softening of credit quality. It is important to remember during these times that well-positioned businesses actually grow, take share of wallet, and expand. Our industry is well positioned to help continue the success of these businesses, as well as help those struggling through a rough time in the economy. I am optimistic that in a couple of years we will look back and recognize the positive impact we were able to have on the economy and the small business community.”

June 2024 Survey Results:
The overall MCI-EFI is 50.2, steady with the May index of 50.7.

• When asked to assess their business conditions over the next four months, 11.5% of the executives responding said they believe business conditions will improve over the next four months, relatively unchanged from 11.1% in May. 76.9% believe business conditions will remain the same over the next four months, down from 77.8% the previous month. 11.5% believe business conditions will worsen, also relatively unchanged from May.

• 7.4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 11.1% in May. 77.8% believe demand will “remain the same” during the same four-month time period, down from 81.5% the previous month. 14.8% believe demand will decline, an increase from 7.4% in May.

• 19.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in May. 73.1% of executives indicate they expect the “same” access to capital to fund business, down from 77.8% last month. 7.7% expect “less” access to capital, relatively unchanged from the previous month.

• When asked, 25.9% of the executives report they expect to hire more employees over the next four months, an increase from 22.2% in 66.6% expect no change in headcount over the next four months, down from 74.1% last month. 7.4% expect to hire fewer employees, up from 3.7% in May.

• 3.9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 85.2% in May. 19.2% evaluate it as “poor,” up from 14.8% last month.

• 14.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 7.4% in May. 48.2% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% last month. 37% believe economic conditions in the U.S. will worsen over the next six months, an increase from 29.6% the previous month.

• In June, 14.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 11.1% the previous month. 77.8% believe there will be “no change” in business development spending, down from 81.5% in May. 7.4% believe there will be a decrease in spending, unchanged from last month.

June 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“I’m a believer that we can control our own optimism by recognizing where opportunities lie, asking what customers want, and then creating a realistic plan and executing it with a frequent follow-up process.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. (FNCB Bank)

Independent, Large Ticket
“Optimism is based on business initiatives to invest in new technologies and applications, but I believe, at a macro level, the headwinds are stronger than the tailwinds at the moment.” Jonathan Albin, Chief Operating Officer, Nexseer Capital

“The continuation of supply chain issues has led to further delay of new equipment deliveries, putting additional pressure on supply of equipment in our verticals relative to market demand.” Glenn Davis, CEO, RESIDCO

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.

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.

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.