Equipment Finance Industry Confidence Highest In More Than Two Years

Washington, DC – The Equipment Leasing & Finance Foundation (the Foundation) has released its August 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market is 58.4, an increase from the July index of 50.7, and the highest level since February 2022. 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 Jeff Elliott, President of Huntington Equipment Finance, said, “Our overall confidence in the near-term future of the industry is high. We’re expecting economic conditions for businesses to improve over the next six months as interest rates decline and investment in U.S. manufacturing continues to grow, which in turn will lead to rising demand for funding to complete capex projects.”

August 2024 Survey Results:

The overall MCI-EFI is 58.4, an increase from the July index of 50.7.

• When asked to assess their business conditions over the next four months, 37.5% of the executives responding said they believe business conditions will improve over the next four months, an increase from 3.9% in July. 45.8% believe business conditions will remain the same over the next four months, down from 76.9% the previous month. 16.7% believe business conditions will worsen, down from 19.2% in July.

• 41.7% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 11.7% in July. 37.5% believe demand will “remain the same” during the same four-month time period, down from 73.1% the previous month. 20.8% believe demand will decline, an increase from 15.4% in July.

• 20.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 19.2% in July. 75% of executives indicate they expect the “same” access to capital to fund business, down from 76.9% last month. 4.2% expect “less” access to capital, relatively unchanged from 3.9% the previous month.

• When asked, 20.8% of the executives report they expect to hire more employees over the next four months, a decrease from 23.1% in July. 70.8% expect no change in headcount over the next four months, up from 69.2% last month. 8.3% expect to hire fewer employees, up from 7.7% in July.

• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 91.7% of the leadership evaluate the current U.S. economy as “fair,” up from 84.6% in July. 8.3% evaluate it as “poor,” down from 15.4% last month.

• 37.5% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 19.2% in July. 41.7% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7% last month. 20.8% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 23.1% the previous month.

• In August, 33.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 19.2% the previous month. 62.5% believe there will be “no change” in business development spending, down from 73.1% in July. 4.2% believe there will be a decrease in spending, down from 7.7% last month.

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

Bank, Small Ticket

“Interest rates are expected to decrease shortly. Historically when this happens businesses tend to increase their capex spending. I believe there is pent-up demand in several sectors that are waiting for this interest rate reduction to happen. Interest rates typically impact transactional business and equipment finance is one of those industries.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. a division of Peoples Security Bank and Trust Company

Bank, Middle Ticket

“Leasing's value proposition is strong in today's economic environment. We are starting to see cracks emerge in some parts of our market, not in an alarming or unanticipated way, as we have been anticipating them for some time, but it is notable that we are finally seeing some weakness appear.”  Jason Lueders, President, Farm Credit Leasing

Independent, Small Ticket

“The equipment finance industry ebbs and flows; it always has and always will. That said, it is a very resilient, creative and opportunistic industry, and rarely can get derailed. Many truly believe the best is yet to come as we navigate the winding road.” Adrian Hebig, Chief Corporate Development Officer, Channel

“I believe the worst is behind us now, and I expect the Fed Fund rate will be cut by a quarter of a point in September. Between now and the end of the year we should experience a gradual improvement in 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.