Monthly Confidence Index - Equipment Finance Industry (MCI-EFI)
August 2010
August 2010 Survey Results:
The overall MCI-EFI is 58.2, a slight increase from the July 2010 index of 57.6.
- When asked to assess if their current business conditions would remain the same over the next four months, 22% of executives responding said they believe business conditions will improve over the next four months, a significant drop from 33.5% in July. 4.9% believe conditions will get worse, an improvement from July response of 7.5%. 73% believe business conditions will remain the same over the next four months, compared to the July response of 55%.
- 22% of survey respondents, down from 30% in July, believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, while 73%, believe demand will "remain the same" during the same four-month time period, and 5% believe demand will decrease.
- 73% of survey respondents indicate they expect the "same" access to capital to fund business, an increase from 67.5% in July. 29% of executives expect more access to capital to fund equipment acquisitions over the next four months.
- When asked, 27% of the executives reported they expect to hire more employees over the next four months, up significantly from 17.5% in July, and 71% expect no change in headcount over the next four months while 2% expect to lay off employees.
- 100% of the leadership still evaluate the current U.S. economy as "poor" or "fair." In August, 68% rated the economy as "fair" and 32% rated the economy as "poor".
- 15% of survey respondents believe that U.S. economic conditions will get "better" over the next six months, down from the July responses of 27.5%. 78% of survey respondents indicate they believe the U.S. economy will "stay the same" over the next six months, up from 60% response in July.
- In August, 34% of respondents indicate they believe their company will increase spending on business development activities during the next six months. 66% believe there will be "no change" in business development spending.
August 2010 Survey Comments from Industry Executive Leadership:
Depending on the market segment they represent, executives have differing, but improving points of view on the current and future outlook for the industry.
Bank Middle Market:
“Companies and individuals continue to delay major capital expenditures, waiting for further evidence of strengthening in the U.S. economy. Pent-up demand for equipment and expansion will have significant favorable impact on the equipment finance industry, which could occur as early as the second quarter of 2011.” Russ Nelson, Farm Credit Leasing
Captive Middle Market:
“It appears demand for equipment loans and leases is increasing slightly. We look for fourth quarter demand to be higher than the first half of the year.” Rob Stowers, Altec Capital
Independent Middle Market:
“The recovery is a lot slower than we had expected. We continue to see demand in certain sectors from the end user side, but not the same confidence in the lending market.” Aylin Cankardes, Rockwell Financial Group
Micro-ticket:
“I feel OK about the equipment finance industry's future. It is the future of the general economy that gives me pause for concern. Our industry needs the economy to realize some measure of expansion in order for businesses to make capital equipment expenditures.” Paul Menzel, Financial Pacific Leasing
Survey Respondent Demographics:
Market Segment:
- Bank: 41.5%
- Captive: 22.0%
- Financial Services: 2.4%
- Independent: 31.7%
- Other: 2.4%
Market Segments Based on Transaction Size of New Business Volume
- Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million): 7.3%
- Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 - $5 Million): 51.2%
- Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 - $249,999): 36.6%
- Micro-Ticket (New Business Volume Avg. Transaction Less Than $25,000): 4.9%
Organization Size (Based on Annual New Business Volume for Fiscal Year 2009):
- Under $50 Million: 7.3%
- $50 Million - $250 Million: 29.3%
- $250 Million - $1 Billion: 31.7%
- Over $1 Billion: 31.7%
