The Equipment Leasing & Finance Foundation (the Foundation) releases the February 2023 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 51.8, an increase from the January index of 48.5.
When asked about the outlook for the future, MCI-EFI survey respondent Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc., said, “We still see pent-up demand in the light and medium-duty segment of transportation. However, we feel it will wane by the third or fourth quarter of this year.”
February 2023 Survey Results:
The overall MCI-EFI is 51.8, an increase from the January index of 48.5.
- When asked to assess their business conditions over the next four months, 16.1% of the executives responding said they believe business conditions will improve over the next four months, an increase from none in January. 61.3% believe business conditions will remain the same over the next four months, down from 69.2% the previous month. 22.6% believe business conditions will worsen, a decrease from 30.8 % in January.
- 9.7% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from none in January. 71% believe demand will “remain the same” during the same four-month time period, a decrease from 88.5% the previous month. 19.4% believe demand will decline, up from 11.5% in January.
- 12.9% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 11.5% in January. 74.2% of executives indicate they expect the “same” access to capital to fund business, an increase from 73.1% last month. 12.9% expect “less” access to capital, down from 15.4% the previous month.
- When asked, 38.7% of the executives report they expect to hire more employees over the next four months, unchanged from January. 54.8% expect no change in headcount over the next four months, a decrease from 61.5% last month. 6.5% expect to hire fewer employees, up from none in January.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 87.1% of the leadership evaluate the current U.S. economy as “fair,” up from 84.6% in January. 12.9% evaluate it as “poor,” a decrease from 15.4% last month.
- 3.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 7.7% in January. 54.8% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7% last month. 41.9% believe economic conditions in the U.S. will worsen over the next six months, an increase from 34.6% the previous month.
- In February 51.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 23.1% the previous month. 41.9% believe there will be “no change” in business development spending, down from 73.1% in January. 6.5% believe there will be a decrease in spending, up from 3.9% last month.
February 2023 MCI-EFI Survey Comment from Industry Executive Leadership:
Independent, Small Ticket
“Recession is likely staying on the sidelines as long as there is a shortage of employees to fill open job positions.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC
Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment, and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.
Who participates in the MCI-EFI?
The respondents are comprised of a wide 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. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence.
How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:
- Current business conditions
- Expected product demand over the next four months
- Access to capital over the next four months
- Future employment conditions
- Evaluation of the current U.S. economy
- U.S. economic conditions over the next six months
- Business development spending expectations
- Open-ended question for comment
How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast eNewsletter, and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.