Equipment finance confidence drops slightly in October
The equipment finance market's confidence dropped to 55.0 in October, as concerns about the economy's long-term health remain due to the COVID-19 pandemic.
Confidence in the equipment finance market is 55.0, which is down slightly from the September index of 56.5 and steady with pre-COVID index levels, according to the Equipment Leasing & Finance Foundation (the Foundation) released the October 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).
Bruce J. Winter, president, FSG Capital, Inc., said in a press release, “It’s now obvious that the economic fallout from this pandemic will continue for the foreseeable future and there will be no quick return to pre-COVID 19 economic metrics. While many of our clients have adapted to a new normal, others have spent their government stimulus and are at risk of closure without additional support. The resiliency of the equipment finance industry is without doubt, but as with other cycles, there will be winners and losers. In this cycle, those lucky enough to have little or no exposure to threatened industries will be the winners, while those with too much exposure to these same segments have no choice but to deal with significant stress.”
When asked to assess their business conditions over the next four months, 29.6% of executives responding said they believe business conditions will improve over the next four months, down from 35.7% in September. 51.9% believe business conditions will remain the same over the next four months, an increase from 46.4% the previous month. 18.5% believe business conditions will worsen, an increase from 17.9% in September.
More than 20% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 28.6% in September. 66.7% believe demand will “remain the same” during the same four-month time period, an increase from 64.3% the previous month. 11.1% believe demand will decline, an increase from 7.1% in September.
A third of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 17.9% in September. 66.7% of executives indicate they expect the “same” access to capital to fund business, a decrease from 78.6% last month. None expect “less” access to capital, a decrease from 3.6% the previous month.
When asked, 25.9% of the executives report they expect to hire more employees over the next four months, up from 17.9% in September. 63% expect no change in headcount over the next four months, a decrease from 71.4% last month. 11.1% expect to hire fewer employees, up slightly from 10.7% the previous month.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 55.6% of the leadership evaluate the current U.S. economy as “fair,” up from 46.4% in September. 44.4% evaluate it as “poor,” down from 53.6% last month.
A little over a quarter of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 50% in September. More than half indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 39.3% last month. 14.8% believe economic conditions in the U.S. will worsen over the next six months, up from 10.7% the previous month.
In October, 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 28.6% last month.