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Equipment Leasing and Finance Industry Confidence Dips

The Equipment Leasing & Finance Foundation released the March 2020 Monthly Confidence Index for the Equipment Finance Industry March 12. 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market in March is 46.0, a decrease from the February index of 58.7.

    

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Hayes Jester, president of Brandywine Capital Associates, said, “The fundamentals of our economy continue to be strong. The current events in the worldwide markets and the impact of COVID-19 are impacting the very near term. Business demand for equipment finance is always based on the long-term perspectives of the commercial sectors, and I do not believe that pessimism is the predominant emotion in our customer base. 2019 was a strong year and I have no reason to believe that demand will not continue to increase in the future. I did not agree with the Federal Reserve’s action of lowering rates, and I don’t believe that the decrease will have any impact on the equipment acquisition decisions of small businesses.”

    

March 2020 survey results show the following:

    

The overall MCI-EFI is 46.0, a decrease from 58.7 in February.

    

When asked to assess their business conditions over the next four months, 3.7 percent of executives responding said they believe business conditions will improve over the next four months, down from 11.5 percent in February. And 48.2 percent of respondents believe business conditions will remain the same over the next four months, a decrease from 84.6 percent the previous month. Business conditions will worsen according to 48.2, an increase from 3.9 percent in February.

    

The demand for leases and loans to fund capital expenditures (capex) will increase over the next four months according to 3.7 percent of the survey respondents, a decrease from 7.7 percent in February. And 59.3 percent believe demand will “remain the same” during the same four-month time period, a decrease from 88.5 percent the previous month. Demand will decline say 37 percent, an increase from 3.9 percent in February.

    

In addition, 14.8 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 19.2 percent in February. The “same” access to capital to fund business is expected to be seen by 77.8 percent of executives, an increase from 76.9 percent last month, and 7.4 percent expect “less” access to capital, an increase from 3.9 percent the previous month.

    

When asked, 29.6 percent of the executives report they expect to hire more employees over the next four months, a decrease from 30.8 percent in February. No change in headcount over the next four months is expected by 66.7 percent, an increase from 61.5 percent last month, and 3.7 percent expect to hire fewer employees, down from 7.7 percent the previous month.

    

The current U.S. economy as “excellent” say 18.5 percent of the leadership, down from 38.5 percent the previous month. The current U.S. economy is “fair” according to 77.8 percent of the leadership, up from 61.5 percent in February, and 3.7 percent evaluate it as “poor,” up from none last month.

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