Equipment leasing and finance index plunges due to coronavirus uncertainty
The Equipment Leasing & Finance Foundation's Monthly Confidence Index for dropped more than 20% to 46.0.
The Equipment Leasing & Finance Foundation’s March 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) dropped more than 20% to 46.0 in March compared to 58.7 for February.
MCI-EFI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, said, “The fundamentals of our economy continue to be strong. The current events in the worldwide markets and the impact of COVID-19 are impacting the very near term. Business demand for equipment finance is always based on the long-term perspectives of the commercial sectors, and I do not believe that pessimism is the predominant emotion in our customer base. 2019 was a strong year and I have no reason to believe that demand will not continue to increase in the future.”
There is a generally pessimistic or cautious outlook among the survey respondents as the situation with coronavirus continues to grow.
When asked to assess their business conditions over the next four months, 3.7% of executives responding said they believe business conditions will improve over the next four months, down from 11.5% in February. 48.2% of respondents believe business conditions will remain the same over the next four months, a decrease from 84.6% the previous month. 48.2% believe business conditions will worsen, an increase from 3.9% in February.
3.7% 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 7.7% in February. 59.3% believe demand will “remain the same” during the same four-month time period, a decrease from 88.5% the previous month. 37% believe demand will decline, an increase from 3.9% in February.
14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 19.2% in February. 77.8% of executives indicate they expect the “same” access to capital to fund business, an increase from 76.9% last month. 7.4% expect “less” access to capital, an increase from 3.9% the previous month.
18.5% of the leadership evaluate the current U.S. economy as “excellent,” down from 38.5% the previous month. 77.8% of the leadership evaluate the current U.S. economy as “fair,” up from 61.5% in February. 3.7% evaluate it as “poor,” up from none last month.
14.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 4% in February. 37% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 88% last month. 48.2% believe economic conditions in the U.S. will worsen over the next six months, up from 8% the previous month.
In March, 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 50% last month. 70.4% believe there will be “no change” in business development spending, up from 42.3% in February. 7.4% believe there will be a decrease in spending, relatively unchanged from 7.7% last month.