Uncategorized Archives - Page 5 of 11 - Equipment Leasing & Finance Foundation

Equipment Finance Industry Confidence Higher in January

Washington, DC, January 19, 2023 – The Equipment Leasing & Finance Foundation (the Foundation) releases the January 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 48.5, an increase from the December index of 45.9.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “2023 brings uncertainty with a looming recession in front of us, yet robust volume and credit quality continue to be our experience. Being nimble and creative to find solutions will be valuable attributes to have in your organization as we stretch our legs into 2023. Fortunately, this is where the commercial equipment finance industry has excelled and I believe it will once again.”

January 2023 Survey Results:
The overall MCI-EFI is 48.5, an increase from the December index of 45.9.

When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 3.7% in December. 69.2% believe business conditions will remain the same over the next four months, up from 55.6% the previous month. 30.8% believe business conditions will worsen, a decrease from 40.7% in December.
None of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 7.4% in December. 88.5% believe demand will “remain the same” during the same four-month time period, an increase from 70.4% the previous month. 11.5% believe demand will decline, down from 22.2% in December.
11.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 14.8% in December. 73.1% of executives indicate they expect the “same” access to capital to fund business, an increase from 70.4% last month. 15.4% expect “less” access to capital, up from 14.8% the previous month.
When asked, 38.5% of the executives report they expect to hire more employees over the next four months, up from 33.3% in December. 61.5% expect no change in headcount over the next four months, an increase from 51.9% last month. None expect to hire fewer employees, down from 14.8% in December.
None of the leadership evaluate the current U.S. economy as “excellent,” down from 3.7% the previous month. 84.6% of the leadership evaluate the current U.S. economy as “fair,” up from 70.4% in December. 15.4% evaluate it as “poor,” a decrease from 25.9% last month.
7.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from none in December. 57.7% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 48.2% last month. 34.6% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 51.9% the previous month.
In January 23.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 37% the previous month. 73.1% believe there will be “no change” in business development spending, up from 59.3% in December. 3.9% believe there will be a decrease in spending, unchanged from last month.

ABOUT THE MCI

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.

JOIN THE CONVERSATION
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.com/LeaseFoundation
LinkedIn: https://www.linkedin.com/company/10989281/
Vimeo: https://vimeo.com/elffchannel

ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

New Foundation Study Examines Issues and Outlook for Captive Finance Industry

Washington, DC, January 17, 2023 – What makes a captive finance company successful? Why are some captive finance companies performing well while others continue to struggle? How can a captive finance company provide additional value to its parent? A new study, “Captive Finance: Embracing Change and Driving Innovation in a Disruptive Market,” released by the Equipment Leasing & Finance Foundation (Foundation) addresses these questions with an examination of the relationship between captives and their parent companies, the evolution of captives and customer demands, the effects of modern technology on this dynamic, and the outlook for the future of the captive finance company industry.

The report was commissioned by the Foundation and prepared by global consulting firm Capgemini. The study is based on industry research and survey data from leading captive finance companies across a wide spectrum of sectors, ticket sizes, market approaches, and geographies, as well as non-captive finance company leaders and service providers. The study identifies three leading trends that are shaping the future of equipment finance:

Providing a one-stop shop for equipment delivered through a seamless omnichannel digital experience;
Offering customized/personalized solutions in an efficient, cost-effective manner; and
Leveraging data-driven management and decision-making.

“This study reflects on the past and current state of the industry to better predict what the future holds, and how captive finance companies can thrive in an ever-changing environment,” said Tom Ware, Foundation Research Committee Chair. “The data and analysis of disruptive trends, innovation, technology modernization, and customer experience can enable captive finance companies to stay relevant and strengthen their market position.”

Download the full report at https://bit.ly/ELFFCaptiveStudy.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

Media contact: Charlie Visconage, cvisconage@leasefoundation.org

Q1 2023 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q1 2023 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.

Among the range of details in the Q1 Snapshot:

Overall, the Foundation projects the U.S. economy will grow by just 0.9% in 2023 due to a possible recession that could start in Q2 2023.
- The economy expanded in Q3 2022 mainly due to robust net export growth, healthy consumer spending, and robust equipment and software investment.

Economic tailwinds for growth in 2023 include:
- A strong labor market, which added 261K jobs in November 2022 and still has job openings well above pre-pandemic levels.
- Post-COVID supply chain shifts prompted by manufacturers rethinking globally distributed supply chain models.
- A pro-industrial legislative boost from Congress passing three major bills over the last 18 months, which collectively authorize at least $600 billion in new spending for a variety of industrial and infrastructure projects.

Economic headwinds include:
- The global economy slowing sharply, as rising interest rates and geopolitical turmoil take their toll. Other risk factors, such as a slowdown in China, threaten to worsen the decline in growth. Fortunately, the U.S. remains relatively insulated from the slowing global economy for now.
- A sharply slowing housing sector, where quickly rising interest rates have dampened demand for housing and led to price drops, plummeting homebuilder sentiment, and record declines in mortgage applications.
- Financial market turmoil with the market for U.S. Treasury bonds experiencing collapses in liquidity, and the potential for a divided Congress facing another debt ceiling showdown.

Recession risk:
- Currently, six of 10 indicators tracked in the Foundation-Keybridge Recession Monitor have exceeded the threshold Keybridge considers “recessionary.”
- High inflation pushing the Fed to raise interest rates is negatively affecting the housing market as well as businesses’ plans to invest.
- Wage growth has lagged inflation for 20 consecutive months, and real hourly earnings for private-sector employees are at levels last seen in January 2020.

Equipment and software investment is expected to grow at a 4.2% pace in 2023.
- Equipment and software investment growth is forecasted to slow as the Fed’s rate hikes weigh on economic growth and cool business investment.
New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 6% year over year in October. Healthy NBV growth throughout 2022 has been supported by the unwinding of supply chains which has finally allowed many firms to acquire the equipment they need.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/

Media contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Improves in December

Washington, DC, December 19, 2022 – The Equipment Leasing & Finance Foundation (the Foundation) releases the December 2022 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 45.9, an increase from the November index of 43.7.

When asked about the outlook for the future, MCI-EFI survey respondent Adam Warner, President, Key Equipment Finance, said, “‘Cautious optimism’ is the theme as we move into 2023. The Federal Reserve is signaling that rate increases are slowing down; yet, this move doesn’t outweigh the softening demand for equipment financing due to rates being so high as a result. Businesses will need to continue moving forward regardless, and that means implementing new technology to increase productivity, efficiency and profitability.”

December 2022 Survey Results:
The overall MCI-EFI is 45.9, an increase from the November index of 43.7.

When asked to assess their business conditions over the next four months, 3.7% of the executives responding said they believe business conditions will improve over the next four months, an increase from none in November. 55.6% believe business conditions will remain the same over the next four months, up from 46.4% the previous month. 40.7% believe business conditions will worsen, a decrease from 53.6% in November.
7.4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 10.7% in November. 70.4% believe demand will “remain the same” during the same four-month time period, an increase from 67.9% the previous month. 22.2% believe demand will decline, up from 21.4% in November.
14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.3% in November. 70.4% of executives indicate they expect the “same” access to capital to fund business, an increase from 64.3% last month. 14.8% expect “less” access to capital, down from 21.4% the previous month.
When asked, 33.3% of the executives report they expect to hire more employees over the next four months, up from 32.1% in November. 51.9% expect no change in headcount over the next four months, a decrease from 64.3% last month. 14.8% expect to hire fewer employees, up from 3.6% in November.
3.7% of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 70.4% of the leadership evaluate the current U.S. economy as “fair,” down from 75% in November. 25.9% evaluate it as “poor,” an increase from 21.4% last month.
None of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from November. 48.2% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 28.6% last month. 51.9% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 71.4% the previous month.
In December 37% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 28.6% the previous month. 59.3% believe there will be “no change” in business development spending, down from 64.3% in November. 3.7% believe there will be a decrease in spending, a decrease from 7.1% last month.

December 2022 MCI-EFI Survey Comments from Industry Executive Leadership:

Captive, Small Ticket
“The pent-up demand is still very strong. We see this continuing through Q2 2023.” Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc

Independent, Small Ticket
“In this economy, cash is king and obtaining financing from traditional funding sources will only get more challenging.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

Bank, Middle Ticket
“We are at an interesting crossroads as economists predict a looming recession and the Fed continues to raise interest rates to tame the inflation beast. Customers are sharpening the pencil on major expansion opportunities to ensure timing is right for investment. We continue to find solutions to provide value to our customers and markets in this challenging environment.” Michael Romanowski, President, Farm Credit Leasing

ABOUT THE MCI

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
S. economic conditions over the next six months
Business development spending expectations
Open-ended question for comment

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

2023 Economic Outlook Forecasts 4.2% Expansion in Equipment and Software Investment and 0.9% GDP Growth Next Year Amid Mild U.S. Recession

Washington, DC, December 15, 2022 – In what is likely to be a more challenging year for both the economy and the equipment finance industry, the 2023 forecast for equipment and software investment growth is 4.2%, according to the 2023 Equipment Leasing & Finance U.S. Economic Outlook. The report released today by the Equipment Leasing & Finance Foundation also forecasts sluggish U.S. GDP growth of 0.9% (annualized) due to a mild recession that is expected to begin midway through the year. The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.

Nancy Pistorio, Foundation Chair and President of Madison Capital LLC, said, “Equipment investment, the lifeblood of the equipment finance industry, has maintained steady growth since the onset of the pandemic. Despite higher interest rates, inflation and expectations of a downturn in 2023, the report indicates that a ‘soft landing’ in which the economy avoids recession is still possible. In addition, there are several factors that may make the looming downturn less severe for our industry than previous recessions, including pro-industrial legislation, equipment order backlogs, and reshoring trends.”

Highlights from the 2023 Outlook include:

Equipment and software investment growth boomed in the second half of 2022 with nearly 12% annualized growth in Q3, providing a solid jumping-off point for 2023. However, rising interest rates are expected to weigh on investment growth next year.
The U.S. economy also saw GDP growth bounce back during the second half of 2022, although underlying conditions remain troublin The housing market is struggling, financial markets are highly volatile, and the global economy is slowing.
The manufacturing sector continues to outperform expectations given rising interest rates and the global economic slowdown. Although activity appears likely to slow in 2023 given expectations for a recession, recent pro-industrial legislation and a push for supply chain re-shoring should give the manufacturing sector a boost.
For Main Street businesses, the combined effects of high inflation and tightening financial conditions are likely to contribute to turbulent operating conditions in 2023. Fortunately, financial stress is still quite low and small business lending activity remains positive for now.
Monetary policy is among the biggest questions facing the equipment finance industry in 2023. The Fed has hinted at the possibility of slowing down interest rate hikes, while stressing it is committed to reining in inflation at the risk of higher unemployment or a recession. Interest rate levels are expected to rise above 5% next year, and potentially higher.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month one vertical is expanding, six are peaking, two are recovering, and three are weakening. Over the next three to six months, year over year:

Agriculture machinery investment growth is likely to sidewind.
Construction machinery investment growth is likely to ease.
Materials handling equipment investment growth may improve slightly.
All other industrial equipment investment growth may continue to decelerate.
Medical equipment investment growth will likely sidewind.
Mining and oilfield machinery investment growth may decelerate.
Aircraft investment growth may continue to pick up.
Ships and boats investment growth is unlikely to accelerate.
Railroad equipment investment growth may have peaked and could decelerate.
Trucks investment growth is unlikely to improve.
Computers investment growth is unlikely to accelerate further.
Software investment growth is unlikely to improve.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The report will be updated quarterly throughout 2023.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.

Download the Momentum Monitor at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Leasing & Finance Foundation Elects Officers, Welcomes New Trustees, and Presents Research Award During Annual Meeting

Washington, DC, December 6, 2022 – The Equipment Leasing & Finance Foundation (Foundation) announced the 2023 officers of its Board of Trustees (Board). Board Officers serving are Nancy Pistorio, President, Madison Capital LLC as Chair; Zack Marsh, CFO, Orion First Financial, LLC as Vice Chair; Miles Herman, President and COO, LEAF Commercial Capital Inc. as Secretary/Treasurer; and Ralph Petta, President and CEO, Equipment Leasing and Finance Association (ELFA) as President. Scott Thacker, Chief Executive Officer, Ivory Consulting Corporation, is Immediate Past Chair. The officer elections were held following the Board‘s annual meeting.

New members appointed to the Foundation Board of Trustees include Andrew Blacklock, Vice President, Strategy and Business Operations, Cisco Systems Capital Corporation; Cindy Fleck, Senior Vice President and General Manager Equipment Finance, Channel; David Normandin, President and CEO, Wintrust Specialty Finance; and Ricardo E. Rios, COO, Commercial Equipment Finance, Inc.

“It’s a privilege to have the leadership experience, professional expertise and commitment of our Trustees to guide the Foundation in 2023,” said Nancy Pistorio. “We’re grateful for their dedication to furthering the Foundation’s mission, which benefits the entire equipment finance industry.”

Trustees continuing on the Board for 2023 are:

Peter Bullen, Executive Vice President, Key Equipment Finance
Christopher Enbom, CEO & Chairman, AP Equipment Financing
Valerie Gerard, Co-Chief Executive Officer, The Alta Group LLC
Shari Lipski, Principal, ECS Financial Services, Inc.
Mark Loken, Vice President, Credit, Farm Credit Leasing
Nancy Robles, President, Eastern Funding LLC
William Tefft, SVP Equipment Management, Pacific Western Bank
Thomas Ware, President, Tom Ware Advisory Services, LLC
Bonnie Wright
Donna Yanuzzi, Senior Vice President, Equipment Finance Officer, 1st Equipment Finance (FNCB Bank)

Kelli Nienaber will continue to serve as Executive Director.

Steven R. LeBarron Award
Research Committee Chair Thomas Ware honored Christopher Enbom, CEO and Chairman, AP Equipment Financing with the Steven R. LeBarron Award for Principled Research. A member of the Foundation Research Committee (FRC) and a Foundation Trustee since 2018, Enbom has participated on several FRC steering committees on topics ranging from Independents, AI/robotic technology, funding securitization and syndication, as well as an upcoming Foundation paper on the supply chain. He was a member of the Managed Solutions Workgroup during the development of the 2016 study on the topic, and he was instrumental in the development of the COVID-19 Impact Survey which tracked the impact of the pandemic on the equipment finance industry from the beginning of the pandemic until the end of 2021. This award is presented annually in memory of Steven LeBarron to the FRC member who demonstrates the insight, fortitude, and dedication he exemplified.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Eases Further in November

Washington, DC, November 17, 2022 – The Equipment Leasing & Finance Foundation (the Foundation) releases the November 2022 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 43.7, a decrease from the October index of 45.

When asked about the outlook for the future, MCI-EFI survey respondent Aylin Cankardes, President, Rockwell Financial Group, said, “There continues to be uncertainty in the markets as a result of inflationary pressures, rising rates, and the unknown impact of mid-term elections. Due to ongoing challenges from supply chain delays, we are seeing increased demand for used equipment. Overall, our customers have been very resilient and underlying growth has been robust so we anticipate a strong finish to 2022, particularly in the energy transition and sustainability finance sector.”

November 2022 Survey Results:
The overall MCI-EFI is 43.7, a decrease from the October index of 45.

When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, unchanged from October. 46.4% believe business conditions will remain the same over the next four months, down from 62.5% the previous month. 53.6% believe business conditions will worsen, an increase from 37.5% in October.
10.7% 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 8.3% in October. 67.9% believe demand will “remain the same” during the same four-month time period, an increase from 66.7% the previous month. 21.4% believe demand will decline, down from 25% in October.
14.3% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 4.2% in October. 64.3% of executives indicate they expect the “same” access to capital to fund business, a decrease from 87.5% last month. 21.4% expect “less” access to capital, up from 8.3% the previous month.
When asked, 32.1% of the executives report they expect to hire more employees over the next four months, up from 29.2% in October. 64.3% expect no change in headcount over the next four months, a decrease from 66.7% last month. 3.6% expect to hire fewer employees, down from 4.2% in October.
3.6% of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 8.3% the previous month. 75% of the leadership evaluate the current U.S. economy as “fair,” up from 66.7% in October. 21.4% evaluate it as “poor,” a decrease from 25% last month.
None of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, unchanged from October. 28.6% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 41.7% last month. 71.4% believe economic conditions in the U.S. will worsen over the next six months, an increase from 58.3% the previous month.
In November 28.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 25% the previous month. 64.3% believe there will be “no change” in business development spending, down from 70.8% in October. 7.1% believe there will be a decrease in spending, an increase from 4.2% last month.

November 2022 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket
“Despite the economic headwinds and rising interest rates there will still be decent demand as equipment that has aged due to supply chain constraints will need to be replaced. We are concerned how the rising costs of borrowing combined with a softening economy will impact some of our leveraged borrowers.” Chris Lerma, President, AP Equipment Financing

Independent, Middle Ticket
“While our customers will pay higher interest rates due to continued policy moves by the Federal Reserve, we don’t expect spending on major capital expenditures to be negatively impacted solely by higher rates. We are, however, on the lookout for slowing in certain sectors that will eventually slow down or delay spending on equipment purchases.” Bruce J. Winter, President, FSG Capital, Inc.

Bank, Middle Ticket
“Supply chain issues look to extend into 2023 delaying equipment purchases. Higher rates are having customers consider leasing options to conserve cash flow.” Michael Romanowski, President, Farm Credit Leasing

[Note: Some MCI survey questionnaires and comments were submitted before Election Day results were publicized.]

ABOUT THE MCI

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

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Q4 2022 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q4 2022 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.

Among the range of details in the Q4 release:
• Overall, the Foundation projects the U.S. economy will grow by 1.8% in 2022, after contracting in the first half of the year.
o   The economy contracted mainly due to weaker inventory investment.
• The labor market is the primary economic tailwind for growth this year:
o   Unemployment is at a multi-decade low, and most sectors have regained the jobs lost early in the pandemic.
o   However, with unemployment so low, employers are lifting wages to attract workers, which contributes to higher inflation.
• Economic headwinds include global economic turmoil and a sharply slowing housing sector:
o   Interest rates are wreaking havoc on financial markets and commodity importers.

   o   Inflation is not expected to vanish in the coming months.
o   Rising mortgage rates are crushing home prices.
• Additional factors to watch include:
o   Consumer reaction to interest rate hikes
o   Energy production and prices
• Equipment and software investment is expected to grow 5.9% in 2022 largely due to rapid growth in Q1.
o   Rapidly-rising interest rates and a slowing economy are expected to weigh on overall E&S investment for the rest of the year, though certain end-use markets will fare better than others.

• New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 4% year over year in August. Robust investment growth early in the year supported NBV growth, though growth may slow later this year as inflation and interest rate hikes impact the economy.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/

Media contact: Charlie Visconage, cvisconage@leasefoundation.org

Q4 Update to the 2022 Economic Outlook Forecasts 5.9% Expansion in Equipment and Software Investment and 1.8% GDP Growth This Year

Washington, DC, October 27, 2022 – Despite early indicators of a modest rebound in equipment and software investment growth in Q3, demand may soften in several end-user markets over the remainder of the year due to high interest rates and expectations for further rate hikes, according to the Q4 update to the 2022 Equipment Leasing & Finance U.S. Economic Outlook. The report released today by the Equipment Leasing & Finance Foundation forecasts equipment and software investment growth of 5.9% in 2022, while U.S. GDP growth of 1.8% is expected. The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.

Nancy Pistorio, Foundation Chair and President of Madison Capital LLC, said, “While many of the factors highlighted in the Foundation’s Q4 Economic Outlook have worsened in recent months, including the U.S. housing sector, the global economic backdrop, and Fed actions to control inflation, there are bright spots. The industrial core of the economy continued to hum along in the late summer and early fall, and demand for equipment remains strong despite concerns of a looming recession.”

Highlights from the Q4 update to the 2022 Outlook include:

Equipment and software investment grew just 1.9 percent (annualized) in Q2, a notable slowdown from strong growth in Q1. The effects of Fed interest rate hikes appear to be filtering through the economy, but most verticals are not showing cause for serious concern. However, demand is expected to soften late this year and in early 2023 as the Fed continues to address inflation.
The U.S. economy contracted through the first six months of 2022, amplifying recession concerns. The labor market remains a bright spot, but higher interest rates are increasingly taking a toll on the U.S. housing market and the global economy, which is struggling under the weight of the strongest dollar in decades. Still, a recession is unlikely to occur in 2022.
In the manufacturing sector, loosening supply chains have allowed industrial activity to continue expanding despite rising interest rates and high inflation weighing on business confidence. The recent passage of multiple infrastructure-related bills should provide a modest tailwind for the equipment finance industry in 2023.
The outlook for Main Street businesses over the remainder of the year has worsened. While small and medium-sized businesses are starting from a position of relative strength, the dual impacts of high inflation and surging interest rates are likely to impact smaller firms first and hardest. With borrowing more expensive and sales expectations weak, small business owners are likely to feel pressure to slow or pause expansion and hiring plans.
Despite rapidly increasing interest rates, the Fed’s actions to quell inflation seem to have had little effect. Fed officials have repeatedly emphasized the importance of reining in inflation, even if it means sending the U.S. economy into a recession.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month four verticals are expanding/thriving, four are peaking/slowing, and four are weakening/struggling. Over the next three to six months, year over year:

Agriculture machinery investment growth is unlikely to improve.
Construction machinery investment growth is likely to slow.
Materials handling equipment investment growth is likely to remain soft.
All other industrial equipment investment growth may continue to decelerate.
Medical equipment investment growth will likely hold steady.
Mining and oilfield machinery investment growth may have peaked, though growth is expected to remain positive.
Aircraft investment growth may begin to rebound.
Ships and boats investment growth is unlikely to accelerate.
Railroad equipment investment growth will likely remain strong.
Trucks investment growth may improve.
Computers investment growth will likely continue to sidewind.
Software investment growth will likely decelerate further.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.

Download the Momentum Monitor at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Lower in October

Washington, DC, October 20, 2022 – The Equipment Leasing & Finance Foundation (the Foundation) releases the October 2022 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 45, a decrease from the September index of 48.7.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, CLFP, President and CEO, Wintrust Specialty Finance, said, “I am optimistic about our industry and our customers finding solutions to manage challenging economic conditions. As the rate of change increases, I think that our industry is well positioned to adapt and continue to find ways to win.”

October 2022 Survey Results:
The overall MCI-EFI is 45, a decrease from the September index of 48.7.

When asked to assess their business conditions over the next four months, none of the executives responding said they believe business conditions will improve over the next four months, a decrease from 3.6% in September. 62.5% believe business conditions will remain the same over the next four months, down from 75% the previous month. 37.5% believe business conditions will worsen, an increase from 21.4% in September.
8.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 10.7% in September. 66.7% believe demand will “remain the same” during the same four-month time period, a decrease from 71.4% the previous month. 25% believe demand will decline, up from 17.9% in September.
4.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 14.3% in September. 87.5% of executives indicate they expect the “same” access to capital to fund business, an increase from 71.4% last month. 8.3% expect “less” access to capital, down from 14.3% the previous month.
When asked, 29.2% of the executives report they expect to hire more employees over the next four months, up from 28.6% in September. 66.7% expect no change in headcount over the next four months, an increase from 64.3% last month. 4.2% expect to hire fewer employees, down from 7.1% in September.
8.3% of the leadership evaluate the current U.S. economy as “excellent,” an increase from 7.1% the previous month. 66.7% of the leadership evaluate the current U.S. economy as “fair,” down from 71.4% in September. 25% evaluate it as “poor,” an increase from 21.4% last month.
None of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 7.1% in September. 41.7% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 39.3% last month. 58.3% believe economic conditions in the U.S. will worsen over the next six months, an increase from 53.6% the previous month.
In October 25% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 28.6% the previous month. 70.8% believe there will be “no change” in business development spending, down from 71.4% in September. 4.2% believe there will be a decrease in spending, an increase from none last month.

October 2022 MCI-EFI Survey Comment from Industry Executive Leadership:

Independent, Small Ticket
“Until the mid-term elections are over, the economy is not likely to see much change.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

ABOUT THE MCI

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

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org