Equipment finance industry confidence reaches highest level in three years

The Equipment Leasing & Finance Foundation (the Foundation) releases the March 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 67.7, an increase from the February index of 64.4, and the highest level since April 2018.

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.

When asked about the outlook for the future, MCI-EFI survey respondent David Drury, Senior Vice President and Head of Equipment Finance, Fifth Third Bank, said, “We are relatively positive on domestic and global economic activity for this year, and likely next. Despite lingering disruptions, with the tailwinds of government stimulus, central bank liquidity, excess capacity, and pent-up demand, global economic growth may positively surprise in 2021. The big question that could change our mind would be a return of inflation, which would change the dovish nature of most global central banks. Higher inflation would lead to higher interest rates and less of an incentive for businesses to borrow and invest.”

The overall MCI-EFI is 67.7, an increase from the February index of 64.4. Other findings include:

• When asked to assess their business conditions over the next four months, 50% of executives responding said they believe business conditions will improve over the next four months, up from 46.2% in February. 46.4% believe business conditions will remain the same over the next four months, unchanged from the previous month. 3.6% believe business conditions will worsen, a decrease from 7.7% in February.
• 42.9% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, 53.6% believe demand will “remain the same” during the same four-month time period, and 3.6% believe demand will decline, all relatively unchanged from February.
• 60.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 50% in February. 32.1% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 38.5% last month. 7.1% believe economic conditions in the U.S. will worsen over the next six months, down from 11.5% the previous month.
• In March 39.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.8% last month. 60.7% believe there will be “no change” in business development spending, a decrease from 69.2% in February. None believe there will be a decrease in spending, unchanged from last month.