A monthly study measuring the confidence level of businesses in the equipment finance sector finds the market is relatively unchanged, reflecting steady industry confidence despite economic, political, and regulatory concerns.
The Equipment Leasing & Finance Foundation Monthly Confidence Index (MCI) for October is 53.3, while September’s index was 53.0.
Designed to collect leadership data, the monthly report provides a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $628 billion equipment finance sector.
Despite the unchanged index levels, some executives remain cautious about the market over time.
“Near term, results will continue to be strong. In the longer term, significant variables like accounting rules, depreciation rates, and cost of funds will change the landscape,” says Harry Kaplun, president, Frost Equipment Leasing and Finance.
October 2012 Survey Results:
The overall MCI-EFI is 53.3, up slightly from the September index of 53.0.
• When asked to assess their business conditions over the next four months, 8.6% of executives responding say they believe business conditions will improve over the next four months, relatively unchanged from 8.8% in September. 74.3% of respondents believe business conditions will remain the same over the next four months, up from 73.5% in September. 17.1% believe business conditions will worsen, down from 17.6% the previous month.
• Twenty percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 11.8% in September. 57.1% believe demand will “remain the same” during the same four-month time period, down from 76.5% the previous month. 22.9% believe demand will decline, up from 11.8% in September.
• Twenty percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 14.7% in September. 80% of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 85.3% the previous month. No survey respondents expect “less” access to capital, unchanged from September.
• When asked, 34.3% of the executives reported they expect to hire more employees over the next four months, up from 29.4% in September; 57.1% expect no change in headcount over the next four months, down from 67.6% last month. However, 8.6% expect fewer employees, up from 2.9% of respondents who expected fewer employees in September.
• Two-thirds of the leadership evaluates the current U.S. economy as “fair,” down from 76.5% last month; 34.3% rate it as “poor,” up from 23.5% in September.
• The U.S. economic conditions will get better over the next six months, according to 8.6% of survey respondents, up from 5.9% in September. Seventy-seven percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 79.4% in September; and, 14.3% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 14.7% who believed so last month.
• In October, 37.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 29.4% in September. However, 62.9% believe there will be “no change” in business development spending, down from 70.6% last month, and no one believes there will be a decrease in spending, unchanged from last month.
Click here for more data information, and to read comments from executives in the industry.