July Confidence Index Up for Equipment Finance

WASHINGTON, DC | Today the Equipment Leasing & Finance Foundation released its July 2011 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), indicating that confidence in the equipment finance market is 56.2, up 6.8% from the June index of 52.6.  The index collects leadership data and reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $521 billion equipment finance sector. 

Looking forward to the future, one survey respondent, Paul Menzel, president and CEO of Financial Pacific Leasing, said: “We continue to wait for the micro and small business segment of the economy to pick up.  Consumers continue to lack confidence in the economy and are debt averse and/or de-leveraging their balance sheets.  The political gridlock on the deficit is a threat to this already fragile recovery.”  He added that this uncertainty is the reason for a guarded forecast.

July findings reported the following:
• When asked to assess their business conditions over the next four months, 14% of executives responding said they believe business conditions will improve over the next four months, an increase from 5.0% in June.  81.4% of respondents believe business conditions will remain the same over the next four months, an increase from 79.5% in June.  Additionally, 4.7% of executives believe business conditions will worsen, a significant decrease from 15.4% in June.
• A total of 14% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 12.8% in June.  A majority 74.4% believe demand will “remain the same” during the same four-month time period, a decrease from 77% the previous month.  However, 11.6% believe demand will decline, up from 10% who believed so in June. 
• Nearly a quarter of executives (23%) expect more access to capital to fund equipment acquisitions over the next four months, flat from June.  Slightly more than three-quarters (76.7%) of survey respondents indicate they expect the “same” access to capital to fund business, also flat with the previous month.  In the last eight months’ surveys, no one responded that they expect “less” access to capital.
• When asked, 32.6% of the executives reported they expect to hire more employees over the next four months, down from 33.3% in June.  No change in headcount is expected by 58% over the next four months, an increase from 53.8% last month, while 9.6% expect fewer employees, a decrease from 12.8% in June.
• Evaluating the current US economy as “fair” is 72% of the leadership, up from 66.7% who did in June.  Only 27.9% rate it as “poor,” down from 33.3% last month.
• Believing that US economic conditions will get “better” over the next six months is 9.3% of survey respondents, up from 5.0% in June.  Indicating they believe the US economy will “stay the same” over the next six months is 79% of survey respondents, down from 82% in June.  Only 11.6% responded that they believe economic conditions in the U.S. will worsen over the next six months, down from 12.8% who believed so last month.
• In July, 44.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 28% in June.  While over half (55.8%) believe there will be “no change” in business development spending, this number is down from 69% last month, and no one believes there will be a decrease in spending, down from 2.6% who believed so last month.

The respondents of this survey are said to comprise 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 are said to constitute a consistent barometer of the industry's confidence.

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