Equipment leasing confidence index hits new low in April
The Equipment Leasing & Finance Foundation's monthly confidence index dropped more than 50% in April due to the COVID-19 pandemic and the economic shutdown.
The Equipment Leasing & Finance Foundation’s Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) took a major nosedive. Confidence in the equipment finance market fell to a historic low in April of 22.3, a more than 50% decrease of the previous low of 46 in March. The result of the COVID-19 pandemic in addition to the economic shutdowns by state government to contain the virus has ground operations to a halt.
MCI-EFI survey respondent Michael DiCecco, executive vice president, Huntington Asset Finance, said, “During these uncertain times, I remain optimistic about the future of the equipment leasing and finance industry. While production is likely to soften in the short term, in many ways we have a great opportunity to affirm our value to our existing clients and demonstrate our value to new ones. It’s an important time to stay close to our clients.”
The general mood of the survey respondents across the board remains very pessimistic as the economic impact continues to hit their businesses.
When asked to assess their business conditions over the next four months, 6.9% of executives responding said they believe business conditions will improve over the next four months, up from 3.7% in March. None believe business conditions will remain the same over the next four months, a decrease from 48.2% the previous month. 93.1% believe business conditions will worsen, an increase from 48.2% in March.
Only 6.9% 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 3.7% in March. 3.5% believe demand will “remain the same” during the same four-month time period, a decrease from 59.3% the previous month. 89.7% believe demand will decline, an increase from 37% in March.
None of the respondents expect more access to capital to fund equipment acquisitions over the next four months, a decrease from 14.8% in March. 53.6% of executives indicate they expect the “same” access to capital to fund business, a decrease from 77.8% last month. 46.4% expect “less” access to capital, an increase from 7.4% the previous month.
When asked, 6.9% of the executives report they expect to hire more employees over the next four months, a decrease from 29.6% in March. 69% expect no change in headcount over the next four months, an increase from 66.7% last month. 24.1% expect to hire fewer employees, down from 3.7% the previous month.
None of the leadership evaluate the current U.S. economy as “excellent,” down from 18.5% the previous month. None of the leadership evaluate the current U.S. economy as “fair,” down from 77.8% in March. 100% evaluate it as “poor,” up from 3.7% last month.
Just over a quarter (27.6%) of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 14.8% in March. 6.9% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 37% last month. 65.5% believe economic conditions in the U.S. will worsen over the next six months, up from 48.2% the previous month.
In April, 17.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.2% last month. 48.3% believe there will be “no change” in business development spending, down from 70.4% in March. 34.5% believe there will be a decrease in spending, an increase from 7.4% last month.
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