The Equipment Leasing & Finance Foundation released the August 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, 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 58.9, an increase from the July index of 57.9.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, said, “All indicators point to the continued strength of the economy in spite of trade and tariff wars. The recent drop in the fed funds rate continues to put the spotlight on rates and historically low margins. As certain sectors of the economy are affected by policy changes, we could experience changes in equipment finance demand.” 

August 2019 Survey Results

The overall MCI-EFI is 58.9, an increase from 57.9 in July.  

• When asked to assess their business conditions over the next four months, 16.7 percent of executives responding said they believe business conditions will improve over the next four months, up from 10 percent in July; 76.7 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 83.3 percent the previous month. Further, 6.7 percent believe business conditions will worsen, unchanged from July.
• 16.7 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 10 percent who believed so in July; 80 percent believe demand will “remain the same” during the same four-month time period, a decrease from 86.7 percent the previous month; and 3.3 percent believe demand will decline, unchanged from July.
• 16.7 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 10 percent in July; 83.3 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 90 percent last month. None expect “less” access to capital, unchanged from last month.
• When asked, 31 percent of the executives report they expect to hire more employees over the next four months, a decrease from 33.3 percent in July; 62.1 percent expect no change in headcount over the next four months, a decrease from 63.3 percent last month; and 6.9 percent expect to hire fewer employees, up from 3.3 percent last month.
• 36.7 percent of the leadership evaluate the current U.S. economy as “excellent,” down from 41.4 percent in July; 60 percent of the leadership evaluate the current U.S. economy as “fair,” an increase from 58.6 percent the previous month; and 3.3 percent evaluate it as “poor,” up from none in July.
• 6.7 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from July; 73.3 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 80 percent the previous month; and 20 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 13.3 percent in July.
• In August, 36.7 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 30 percent last month; 63.3 percent believe there will be “no change” in business development spending, a decrease from 70 percent in June. None believe there will be a decrease in spending, unchanged from last month.

August 2019 MCI-EFI Survey Comments from Industry Executive Leadership

Independent, Small Ticket
“I'm optimistic that it seems neither businesses nor consumers are over-leveraged. I'm concerned that talk of recession is making businesses pull back, creating a self-fulfilling prophecy.” — Quentin Cote, CLFP, President, Mintaka Financial, LLC

Bank, Small Ticket
“Business demand remains strong with month-over-month growth even into the summer. Credit quality remains solid and portfolio performance continues well.” — David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“We do not expect significant new investment by our customers until trade issues are resolved.  Customers are being extremely cautious with new investment opportunities.” — Michael Romanowski, President, Farm Credit Leasing

“Business optimism and capital investment remain strong in the markets we serve.” — Alan Sikora, CEO, First American Equipment Finance