ELFA monthly confidence index shows continued optimism

The Equipment Leasing and Finance Foundation (the Foundation) recently released the results in the form of the March 2013 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 $725 billion equipment finance sector. Overall, confidence in the equipment finance market is 58.0, a slight decrease from the February index of 58.7, reflecting a leveling off in industry participants’ optimism after two consecutive increases.

The results reflect the sentiments of 50 equipment finance industry executives, including bank leasing company officials, captive finance company executives and independent equipment finance companies who deal in equipment finance ranging from materials handling equipment to tugs and barges to mining and agricultural equipment.
Respondents are asked about the outlook for the next four months, and 93.8% feel that business conditions will improve or stay the same. William Sutton, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association, said in a recent interview that the index suggests a positive environment. “Anecdotally, I hear that across a vast majority of sectors, including material handling.”

For 2013 as a whole, Sutton said ELFA’s research mirrors other economic analysis in calling for a sluggish first half of the year followed by a pickup continuing into 2014. Housing, construction, and industrial equipment will be strong this year, with transportation continuing at average levels.

Sutton also commented on Washington’s impact on economic growth. “Customers and CFOs are all sitting on their decisions, and delaying capital expenditures to await the latest word,” said Sutton. “It seems to be acting as a speed bump for the people in charge of making capital expenditure decisions. The more these uncertainties are resolved, the more we’ll see that pickup later in the year.”

More March 2013 survey results:
The overall MCI-EFI is 58.0, a decrease from the February index of 58.7.
● When asked to assess their business conditions over the next four months, 21.9% of executives responding said they believe business conditions will improve over the next four months, up from 20% in February. About 72% of respondents believe business conditions will remain the same over the next four months, down from 77.1% in February. 6.3% believe business conditions will worsen, up from 2.9% the previous month.

● 21.9% of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, an increase from 20% in February. Approximately 69% believe demand will “remain the same” during the same four-month time period, down from 77.1% the previous month. About 9% believe demand will decline, up from 2.9% in February.

● 28.1% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 22.9% in February. 68.8% of survey respondents indicate they expect the “same” access to capital to fund business, a decrease from 77.1% the previous month. 3.1% expect “less” access to capital, up from zero percent of respondents in February.

● When asked, 25% of the executives reported they expect to hire more employees over the next four months, up from 22.9% in February. 71.9% expect no change in headcount over the next four months, up from 65.7% last month. 3.1% expect fewer employees, down from 11.4% of respondents who expected fewer employees in February.

● 84.4% of the leadership evaluates the current U.S. economy as “fair,” down from 85.7% last month. About 13% rate it as “poor,” up from 11.4% in February. One survey respondent rated the current economy as “excellent.”

● 15.6% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 22.9% in February, and 71.9% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 74.3% in February. 12.5% believe economic conditions in the U.S. will worsen over the next six months, an increase from 2.9% who believed so last month.

● In March, 31.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37.1% in February. 68.8% believe there will be “no change” in business development spending, up from 60% last month. No one believes there will be a decrease in spending, down from 2.9% who believed so last month.