Industry insiders think next year will be positive but expect to see slight increases in delinquency and credit losses.
The Equipment Leasing & Finance Foundation (the Foundation) released the December 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 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 $903 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.4, steady with the November index of 64.2.
When asked about the outlook for the future, MCI-EFI survey respondent David Schaefer, CEO, Mintaka Financial LLC, said, “We are very pleased with our year-over-year growth in application volume, originations, approval rates and access to capital. We think next year will be positive again but expect to see slight increases in delinquency and credit losses. We have seen extraordinary portfolio performance the past three years, but we’re planning for a more normal period in 2015.”
December 2014 Survey Results
The overall MCI-EFI is 63.4, steady with the November index of 64.2.
• When asked to assess their business conditions over the next four months, 28 percent of executives responding said they believe business conditions will improve over the next four months, up slightly from 27.3 percent in November. 72 percent of respondents believe business conditions will remain the same over the next four months, up from 69.7 percent in November. None believe business conditions will worsen, down from 3 percent the previous month.
• 22 percent of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 30.3 percent in November. 72 percent believe demand will “remain the same” during the same four-month time period, up from 66.7 percent the previous month. 6.3 percent believe demand will decline, up from 3 percent in November.
• 22 percent of executives expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 21.2 percent in November. 78 percent of survey respondents indicate they expect the “same” access to capital to fund business, down slightly from 78.8 percent in November. None expect “less” access to capital, unchanged from the previous month.
• When asked, 43.8 percent of the executives reported they expect to hire more employees over the next four months, a decrease from 45.4 percent in November. 50 percent expect no change in headcount over the next four months, up from 48.5 percent last month. 6.3 percent expect fewer employees, essentially unchanged from November.
• 3 percent of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. 97 percent of the leadership evaluate the current U.S. economy as “fair,” and none rate it as “poor,” both also unchanged from November.
• 47 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 42.4 percent who believed so in November. 53 percent of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 54.6 percent in November. None believe economic conditions in the United States will worsen over the next six months, down from 3 percent last month.
• In December, 37.5 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 42.4 percent in November. 62.5 percent believe there will be “no change” in business development spending, an increase from 54.6 percent last month. None believe there will be a decrease in spending, down from 3 percent last month.
For more information, visit www.LeaseFoundation.org.
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