The Equipment Leasing & Finance Foundation (the Foundation) has released its June 2015 Monthly Confidence Index for the Equipment Finance Industry.
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 $903-billion equipment finance sector.
Overall, confidence in the equipment finance market is 63.0, down 4.5 points from the May index of 67.5.
Thomas Jaschik, president of BB&T Equipment Finance, said, “I believe any rise in interest rates will spur activity within the equipment finance industry. Companies continue to defer capital expenditures as long as possible. A rise in interest rates will hopefully provide a catalyst to accelerate capital expenditures as costs may rise in the future.”
June 2015 Survey Results:
The overall MCI-EFI is 63.0, an easing from the May index of 67.5.
June 2015 MCI-EFI Survey Comments from Industry Executive Leadership:
Independent, Small Ticket
“Competition is robust due to new market entrants. Access to capital is abundant and new channels focused on end users are challenging us to adapt and change. Banks are actively looking to deploy capital. Secured and unsecured loan products are prevalent.” David Schaefer, CEO, Mintaka Financial, LLC
Bank, Small Ticket
“We are starting to see signs that both the consumer and businesses are starting to increase spending due to elevated confidence in the economy. If this ultimately occurs in tandem, we should see accelerating growth in equipment finance in the foreseeable future.” Paul Menzel, president & CEO, Financial Pacific Leasing, LLC
Bank, Middle Ticket
“The revised first quarter GDP showed economic contraction and economists have revised down their growth projections for the full year. This will likely mean that interest rates will be kept at these historically low levels for longer than expected, further pressuring interest margins.” Adam D. Warner, president, Key Equipment Finance and immediate past chairman of the Equipment Leasing and Finance Association (ELFA)
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.
Who participates in the MCI-EFI?
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.
How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:
Survey results are posted on the Foundation website, http://www.leasefoundation.org/research/mci/ , included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.