Equipment Finance Industry Confidence Remains Steady In July

Washington, DC – The Equipment Leasing & Finance Foundation (the Foundation) has released its July 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market held steady at 50.7. It was also 50.7 in May before dropping slightly to 50.2 in June. 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.

When asked about the outlook for the future, MCI-EFI survey respondent Lyndon Thompson, President, Byline Financial Group, said, “Companies are falling behind on capex, but the need for replacement is necessary, despite rising costs and increased financing expenses. Upgrades are essential for growth and to stay competitive, though it’s unlikely costs will decrease in the foreseeable future.”

July 2024 Survey Results:

The overall MCI-EFI is 50.7, steady with the June index of 50.2.

When asked to assess their business conditions over the next four months, 3.9% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 11.5% in June. 76.9% believe business conditions will remain the same over the next four months, unchanged from the previous month. 19.2% believe business conditions will worsen, up from 11.5% in June.

• 11.5% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.4% in June. 73.1% believe demand will “remain the same” during the same four-month time period, down from 77.8% the previous month. 15.4% believe demand will decline, a slight increase from 14.8% in June.

• 19.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, unchanged from June. 76.9% of executives indicate they expect the “same” access to capital to fund business, up from 73.1% last month. 3.9% expect “less” access to capital, down from 7.7% the previous month.

• When asked, 23.1% of the executives report they expect to hire more employees over the next four months, a decrease from 25.9% in June. 69.2% expect no change in headcount over the next four months, up from 66.6% last month. 7.7% expect to hire fewer employees, relatively unchanged from June.

• None of the leadership evaluate the current U.S. economy as “excellent,” down from 3.9% the previous month. 84.6% of the leadership evaluate the current U.S. economy as “fair,” up from 76.9% in June. 15.4% evaluate it as “poor,” down from 19.2% last month.

• 19.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 14.8% in June. 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. 23.1% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 37% the previous month.

• In July, 19.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 14.8% the previous month. 73.1% believe there will be “no change” in business development spending, down from 77.8% in June. 7.7% believe there will be a decrease in spending, relatively unchanged from last month. 

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

Bank, Small Ticket

“The current environment in small ticket equipment leasing is testing business models. Some will demonstrate a strong resilience and others will illustrate portfolio performance issues. Either way, times of stress strengthen business practices and make our industry stronger in the long run. I am confident that the equipment leasing and finance industry will become stronger and adapt to continue to meet the needs of our customers in new ways.” - David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Independent, Small Ticket

“My main concern is the Fed will remain stubbornly restrictive and overshoot sticking to a 2% inflation mandate. Very little makes me optimistic, with the impending election most likely causing a stalemate.” - Mark Bonanno, President and Chief Operating Officer, North Mill Equipment Finance

“Inflation (higher than acceptable), high interest rates, and robust federal government spending continue to put a drag on the economy.” - James D. Jenks, CEO, Global Finance and Leasing Services, LLC

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.