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Equipment Finance Industry Confidence Down in August | Construction News

The August report about a key index that tracks trends in the equipment financing industry says that overall confidence in the equipment finance market stands at 58.9, down from the previous two months’ indices of 61.4.

The Equipment Leasing & Finance Foundation's Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) 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 $827-billion equipment finance sector.

When asked about the outlook for the future, MCI-EFI survey respondent Thomas Jaschik, President, BB&T Equipment Finance, said, “The next two months will be very interesting for the equipment finance industry.  Will the economy accelerate, as many economists have predicted? Will U.S. business feel confident in making capital investments?  Or, will the economy continue its lackluster recovery?  The next 60 days should tell whether this will be a year of exceptional or limited growth for our industry.”

August 2014 Survey Results:

When asked to assess their business conditions over the next four months, 18.2% of executives responding said they believe business conditions will improve over the next four months, down from 28.6% in July.  78.8% of respondents believe business conditions will remain the same over the next four months, up from 68.6% in July.  3% believe business conditions will worsen, unchanged from the previous month.

Some 21.2% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.7% in July.  75.8% believe demand will “remain the same” during the same four-month time period, up from 68.6% the previous month.  3% believe demand will decline, down from 5.7% who believed so in July.

The survey showed that 15.2% of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 25.7% in July.  84.8% of survey respondents indicate they expect the “same” access to capital to fund business, an increase from 74.3% in July.  No one expects “less” access to capital, unchanged from the previous month.

When asked, 33.3% of the executives reported they expect to hire more employees over the next four months, a decrease from 37% in July.  57.6% expect no change in headcount over the next four months, down from 60% last month.  9.1% expect fewer employees, up from 2.9% who expected fewer employees in July.

According to the survey, 6.1% of the leadership evaluates the current U.S. economy as “excellent,” up from 5.7% last month.  87.9% of the leadership evaluates the current U.S. economy as “fair,” a slight decrease from 88.6% in July.  6.1% rate it as “poor,” relatively unchanged from the last four months.

Some 30.3% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 22.9% who believed so in July.  66.7% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 74.3% in July.  3% believe economic conditions in the U.S. will worsen over the next six months, unchanged from last month.

In August, 21.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 25.7% in July.  78.8% believe there will be “no change” in business development spending, an increase from 74.3% last month.  None believe there will be a decrease in spending, unchanged from last month.

August 2014 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket

“We continue to see somewhat slack demand from the small business sector as companies continue to be very conservative in their expectations of overall growth.  The recent global economic news (Japan and Europe) doesn't support a strong U.S. economy.  Overall, we expect demand for capex expenditures to be in the low to moderate range.” David Schaefer, Chief Executive Officer, Mintaka Financial, LLC

Independent, Middle Ticket

“While employment seems to be improving, reflecting a slowly improving economy, the International issues could affect consumer sentiment and negatively impact growth.” William Besgen, President and Chief Operating Officer, Hitachi Capital America Corp.

Bank, Middle Ticket

“Customers are continuing to demand creative equipment finance solutions.  This is a market where we can demonstrate the value we provide to our partners and customers.” Mike Romanowski, President, CoBank Farm Credit Leasing.

The report can be found here.


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