The Equipment Leasing & Finance Foundation (https://www.leasefoundation.org/) recently released its February 2024 Monthly Confidence Index ( https://www.leasefoundation.org/industry-resources/monthly-confidence-index/) for the Equipment Finance Industry (MCI-EFI). The index provides a qualitative assessment of prevailing business conditions and future expectations, as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market stands at 51.7, reflecting an increase from January's index of 48.6.
Responding to inquiries about the future outlook, Jeffry Elliott, CLFP, President of Huntington Equipment Finance and a respondent to the MCI-EFI survey, stated, 'We believe there is a 50/50 chance of a recession this year, which will likely result in lower capex spending on equipment, at least in the first half or until interest rates decline. However, following the significant delay in equipment acquisitions last year, we still expect considerable activity this year, as equipment wears out and replacement can be delayed only so long. The speed of onshoring and reshoring also will determine the demand for acquiring equipment or capex. Fortunately, long-term growth prospects for the United States and North America are strong, and we think the largest-ever expansion in our nation’s history is on the horizon.'
February 2024 Survey Results:
• The overall MCI-EFI is 51.7, an increase from January's index of 48.6.
• Regarding business conditions over the next four months, 10.7% of executives anticipate improvement, a decrease from 20.7% in January. 82.1% expect conditions to remain the same, up from 62.1% the previous month. 7.1% foresee a worsening of conditions, down from 17.2% in January.
• Expectations for demand for leases and loans to fund capital expenditures (capex) over the next four months have slightly shifted, with 7.1% anticipating an increase (down from 13.8% in January), 78.6% expecting it to remain the same (up from 65.5%), and 14.3% anticipating a decline (down from 20.7%).
• The proportion of respondents expecting more access to capital for equipment acquisitions over the next four months increased to 14.3% (from 13.8% in January), while 75% expect the same access (down from 75.9%), and 10.7% expect less access (up slightly from 10.3%).
• Expectations regarding hiring have shifted, with 21.4% expecting to hire more employees over the next four months (up from 6.9% in January), 71.4% expecting no change (down from 79.3%), and 7.1% expecting to hire fewer employees (down from 13.8%).
• Evaluation of the current U.S. economy shows a slight increase in those rating it as 'excellent' (3.6%, up from none), while 89.3% rate it as 'fair' (down from 93.1%) and 7.1% rate it as 'poor' (relatively unchanged from 6.9%).
• Expectations for U.S. economic conditions over the next six months show a slight increase in those expecting improvement (17.9%, up from 13.8%), while 67.9% expect conditions to stay the same (up from 65.5%), and 14.3% expect conditions to worsen (down from 20.7%).
• Regarding business development spending in the next six months, 21.4% anticipate an increase (up from 17.2%), 67.9% expect no change (up from 65.5%), and 10.7% anticipate a decrease (down from 17.2%)."
