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November Index Reports Improvement in Equipment Finance Industry Confidence

The Equipment Leasing & Finance Foundation, Washington, D.C., has released the November 2011 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), which collects data from executives in the $628 billion equipment finance sector. According to the index, confidence in the equipment finance market is 57.4, up from the October index of 50.7, indicating an increase in optimism about business activity despite concerns about the global economic situation.

When asked to assess their business conditions over the next four months, 18.9 percent of respondents said they believe business conditions will improve over the next four months (up from 9.8 percent in October); 75.7 percent believe business conditions will remain the same over the next four months (a decrease from 80.5 percent in October); and 2 percent of executives believe business conditions will worsen (a decrease from 9.8 percent in October).

According to the report, 24.3 percent of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months (an increase from 17.1 percent in October); 70.3 percent believe demand will remain the same during the same four-month time period (up from 68.3 percent the previous month); and 5.4 percent believe demand will decline (down from 14.6 percent in October).

The index also found that 27 percent of executives expect more access to capital to fund equipment acquisitions over the next four months (up from 12.2 percent in October); and 73 percent of respondents expect the same access to capital to fund business (a decrease from 87.8 percent the previous month). 

Regarding hiring, 16.2 percent of respondents expect to hire more employees over the next four months, (up from 14.6 percent in October); 75.7 percent expect no change in headcount over the next four months (a decrease from 78 percent last month); while 8.1 percent expect fewer employees (an increase from 7.3% in October). 

Overall, 75.7 percent of respondents rate the current U.S. economy as “fair,” an increase from 58.5 percent last month, while 24.3 percent rate it as “poor,” down from 41.5 percent in October.

Looking toward the future, 13.5 percent of survey respondents believe that U.S. economic conditions will get better over the next six months (up from 4.9 percent in October); 86.5 percent believe it will stay the same over the next six months (up from 78 percent in October); and no one responded that they believe economic conditions will worsen over the next six months (compared with 17.1 percent last month). 

In November, 32.4 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months (up from 26.8 percent in October); 67.6 percent believe there will be no change in business development spending (down from 68.3 percent last month); and no one believes there will be a decrease in spending (down from 4.9 percent last month). 

MCI-EFI respondents are comprised of a 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.

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