The Equipment Leasing & Finance Foundation (the Foundation) releases the November 2020 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 56.1, an increase from the October index of 55.0.
The Foundation also releases highlights of the COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry.
[Note: Some MCI and COVID-19 Impact survey questionnaires and comments were submitted before Election Day results were publicized.]
When asked about the outlook for the future, MCI-EFI survey respondent Michael Romanowski, President, Farm Credit Leasing, said, “All eyes are on the election. Depending on what shakes out with the political environment will impact businesses’ longer-term plans for investment. The present environment is on shaky ground and fiscal stimulus is needed to stop the tremors.”
November 2020 Survey Results
The overall MCI-EFI is 56.1, an increase from the October index of 55.0.
- When asked to assess their business conditions over the next four months, 26.9% of executives responding said they believe business conditions will improve over the next four months, down from 29.6% in October. 53.9% believe business conditions will remain the same over the next four months, an increase from 51.9% the previous month. 19.2% believe business conditions will worsen, an increase from 18.5% in October.
- 19.2% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 22.2% in October. 69.2% believe demand will “remain the same” during the same four-month time period, an increase from 66.7% the previous month. 11.5% believe demand will decline, relatively unchanged from 11.1% in October.
- 23.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 33.3% in October. 76.9% of executives indicate they expect the “same” access to capital to fund business, an increase from 66.7% last month. None expect “less” access to capital, unchanged from the previous month.
- When asked, 30.8% of the executives report they expect to hire more employees over the next four months, up from 25.9% in October. 57.7% expect no change in headcount over the next four months, a decrease from 63% last month. 11.5% expect to hire fewer employees, relatively unchanged from 11.1% in October.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” up from 55.6% in October. 23.1% evaluate it as “poor,” down from 44.4% last month.
- 34.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 25.9% in October. 50% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 59.3% last month. 15.4% believe economic conditions in the U.S. will worsen over the next six months, up from 14.8% the previous month.
- In November, 26.9 % of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 22.2% last month. 69.2% believe there will be “no change” in business development spending, a decrease from 70.4% in October. 3.9% believe there will be a decrease in spending, down from 7.4% last month.
- Bank 53.8%
- Captive 19.2%
- Independent 27%
Market Segments Based on Transaction Size of New Business Volume
- Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million) 11.5%
- Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 – $5 Million) 65.4%
- Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 – $249,999) 23%
- Micro-Ticket (New Business Volume Avg. Transaction Less Than $25,000) 0%
- Under $50 Million 7.7%
- $50 Million – $250 Million 19.2%.
- $250 Million – $1 Billion 23%
- Over $1 Billion 50%