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Monthly Confidence Index - Equipment Finance Industry (MCI-EFI)
August 2009
August 2009 Survey Results:
The overall Monthly Confidence Index of the Equipment Finance Industry (MCI-EFI) is 54.9, up from 49.2 in July 2009. Respondents indicate:
- When asked to assess if their current business conditions would remain the same over the next four months, 37.5% of executives responding said they believe business conditions will improve over the next four months, up from only 20% in July. 60% believe conditions will stay the same over the next four months, with only 2.5% indicating they believe business conditions will worsen over the next four months.
- The majority of survey respondents, 82.5%, up from 77.8% in July, believe demand for leases and loans to fund Capital Expenditures (Cap Ex) will remain the same over the next four months. Each month, since May 2009, this number is steadily increasing indicating a somewhat optimistic outlook.
- The majority of survey respondents, 95% expect the same or slightly more access to capital to fund equipment acquisitions over the next four months, up 8.3% from July.
- When asked, 27.5% of the executives reported they expect to have fewer employees in their company over the next few months, compared to July's response that 20% expected to reduce their workforce headcount over the next few months.
- The leadership's view of the current economy remains poor, but improving. 67.5% of the survey respondents assessed the U.S. economy as "poor" compared to 75.6% from July. 32.5% rated the current economy as "fair" vs. 24.4% who rated it as "fair" in July, and no respondents rated the current U.S. economy as good or excellent.
- A remarkable 50% of survey respondents now believe the U.S. economic conditions will get "better" over the next six months vs. only 37.8% who believed this in July. However 47.5 % believe the US economy will "stay the same" during the same period.
- 25% of respondents believe their company will increase spending on business development activities during the next six months, up 16.5% from July, while 70% believe their will be "no change" in business development spending.
August 2009 Survey Comments from Industry Executive Leadership:
-
From the Small-ticket segment:
"The industry is a vital link in the ongoing recovery of the economy. Those who focus on their core fundamentals will be served well." Donnie Bunn, First South Leasing LLC -
From the Middle Market segment:
"Although demand is down, funding continues to be the primary problem. The banks continue to be very tight and the quality bar continues to rise. As long as the Regulators continue to be overbearing in loan classification, lending will not loosen up. Small to middle market companies continue to have extreme difficulty in collecting accounts receivables and will continue to falter without better liquidity." Explains George Booth, Black Rock Capital LLC -
From the Large-ticket segment:
"The downward economic trends in many of the brown water marine and rail transportation areas appear to be 'bottoming out' but given state of other industries that are traditional users of equipment finance I don't expect to see significant improvements for our industry before early 2010." Commented the president of a large ticket equipment lessor.
Survey Respondent Demographics:
Market Segment:
- Bank 34.2%
- Captives 21.1%
- Financial Services 10.5%
- Independent 28.9%
- Other 5.3%
Market Segments Based on Transaction Size of New Business Volume
- Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million) 13.2%
- Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 - $5 Million) 44.7%
- Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 - $249,999) 42.1%
Organization Size (Based on Annual New Business Volume for Fiscal Year 2008):
- Under $50 Million 15.8%
- $50 Million - $250 Million 15.8%
- $250 Million - $1 Billion 26.30%
- Over $1 Billion 42.1%
