The Equipment Leasing & Finance Foundation (the Foundation) released the April 2022 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 56.1, a decrease from the March index of 58.2.

When asked about the outlook for the future, MCI-EFI survey respondent Jim DeFrank, Executive Vice President and Chief Operating Officer, Isuzu Finance of America, Inc., said, “There is huge pent-up demand for all kinds of products. In the transportation space, the final mile vehicles are in great demand, and we see this continuing for at least 12 to 18 months. Once the supply chain catches up, we will see some kind of normalcy return to the equipment finance industry.”

April 2022 Survey Results

The overall MCI-EFI is 56.1, a decrease from the March index of 58.2.

• When asked to assess their business conditions over the next four months, 14.8 percent of executives responding said they believe business conditions will improve over the next four months, a decrease from 21.4 percent in March. 63 percent believe business conditions will remain the same over the next four months, up from 50 percent the previous month. 22.2 percent believe business conditions will worsen, a decrease from 28.6 percent in March.
• 29.6 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, up from 25 percent in March. 55.6 percent believe demand will “remain the same” during the same four-month period, a decrease from 75 percent the previous month. 14.8 percent believe demand will decline, up from none in March.
• 22.2 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 21.4 percent in March. 77.8 percent of executives indicate they expect the “same” access to capital to fund business, a decrease from 78.6 percent last month. None expect “less” access to capital, unchanged from the previous month.
• When asked, 40.7 percent of the executives report they expect to hire more employees over the next four months, down from 46.4 percent in March. 59.3 percent expect no change in headcount over the next four months, an increase from 50 percent last month. None expect to hire fewer employees, down from 3.6 percent in March.
• 14.8 percent of the leadership evaluate the current U.S. economy as “excellent,” an increase from 3.6 percent the previous month. 74.1 percent of the leadership evaluate the current U.S. economy as “fair,” down from 85.7 percent in March. 11.1 percent evaluate it as “poor,” a slight increase from 10.7 percent last month.
• 7.4 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, relatively unchanged from 7.1 percent in March. 51.9 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.1 percent last month. 40.7 percent believe economic conditions in the U.S. will worsen over the next six months, an increase from 35.7 percent the previous month.
• In April 29.6 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 42.9 percent the previous month. 66.7 percent believe there will be “no change” in business development spending, up from 57.1 percent in March. 3.7 percent believe there will be a decrease in spending, up from none last month.

April 2021 MCI-EFI Survey Comments from Industry Executive Leadership

Independent, Small Ticket

“The Russian-Ukraine war will have economic fallout around the world for the near term.” – James D. Jenks, CEO, Global Finance and Leasing Services, LLC

 Independent, Middle Ticket

“The Fed's stated position to raise rates to try to tame inflation will begin to have consequences in the economy. As consumers spend their leftover stimulus funding this year, there will be less money available for discretionary spending, and the rapidly rising costs of staples will hurt those at the lowest end of the income spectrum.” – Bruce J. Winter, President, FSG Capital, Inc.