Monthly Confidence Index – Equipment Finance Industry (MCI-EFI) – September 2018

Monthly Confidence Index – Equipment Finance Industry (MCI-EFI) – September 2018

The Equipment Leasing & Finance Foundation (the Foundation) releases the September 2018 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Designed to collect leadership data, 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 rose in September to 65.5, up from the August index of 60.7.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, CLFP, Managing Director, Commercial Finance Group, Hanmi Bank, said, “The summer of 2018 has been brisk with activity and funded volume has been strong. Continued economic confidence and indicators lead me to believe that this will continue in the short term, thus I am optimistic about the remainder of 2018 and the start of 2019.”

September 2018 Survey Results

The overall MCI-EFI is 65.5, an increase from 60.7 in August.

  • When asked to assess their business conditions over the next four months, 17.9% of executives responding said they believe business conditions will improve over the next four months, an increase from 13.3% in August. 82.1% of respondents believe business conditions will remain the same over the next four months, an increase from 80% the previous month. None believe business conditions will worsen, a decrease from 6.7% who believed so the previous month.
  • 35.7% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 16.7% in August. 64.3% believe demand will “remain the same” during the same four-month time period, a decrease from 83.3% the previous month. None believe demand will decline, unchanged from August.
  • 10.7% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.7% in August. 89.3% of executives indicate they expect the “same” access to capital to fund business, an increase from 83.3% last month. None expect “less” access to capital, unchanged from last month.
  • When asked, 50% of the executives report they expect to hire more employees over the next four months, an increase from 36.7% in August. 50% expect no change in headcount over the next four months, a decrease from 63.3% last month. None expect to hire fewer employees, unchanged from last month.
  • 51.9% of the leadership evaluate the current U.S. economy as “excellent,” up from 40% last month. 48.2% of the leadership evaluate the current U.S. economy as “fair,” down from 60% in August. None evaluate it as “poor,” unchanged from last month.
  • 11.1% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 13.3% in August. 85.2% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 73.3% the previous month. 3.7% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 13.3% in August.
  • In September, 40.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 33.3% in August. 59.3% believe there will be “no change” in business development spending, a decrease from 66.7% the previous month. None believe there will be a decrease in spending, unchanged from last month.

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September 2018 Survey Comments from Industry Executive Leadership

Independent, Small Ticket
“I’m optimistic about overall economic activity. The trade wars don’t seem to be curbing small business capital purchases.” Quentin Cote, CLFP, President, Mintaka Financial, LLC

Bank, Middle Ticket
“As we enter into the last part of the year, we expect large projects to close out and to see an increase in solar opportunities as companies look to take advantage of the 30 percent solar tax credit in 2019.” Michael Romanowski, President, Farm Credit Leasing Services Corporation

Captive, Middle Ticket
“I am optimistic because tax reform and deregulation are stimulating the economy. Rising rates, lease accounting rules and tariffs concern me.” James Cress, Vice President and General Manager, Stryker Flex Financial

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Survey Demographics

Market Segment

  • Bank 66.6%
  • Captive 11%
  • Financial Services 0%
  • Independent 18.53%
  • Other  3%

Market Segments Based on Transaction Size of New Business Volume

  • Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million) 18.5%
  • Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 – $5 Million) 52%
  • Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 – $249,999) 30%
  • Micro-Ticket (New Business Volume Avg. Transaction Less Than $25,000) 0.00%

Organization Size

  • Under $50 Million 7.4%
  • $50 Million – $250 Million 11%
  • $250 Million – $1 Billion 22%
  • Over $1 Billion 59%

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