Monthly Confidence Index dips in May.
Press Release Summary:
May 22, 2012 - ELFA released May 2012 Monthly Confidence Index for Equipment Finance Industry. Overall, confidence in equipment finance market is 59.2, down slightly from April index of 62.1, reflecting uncertainty about pace of U.S. economic growth and concerns about global political and economic factors. When asked to assess business conditions over next 4 months, 17.1% of executives responding said they believe business conditions will improve, down from 23.5% in April.
Original Press Release
Equipment Lease Finance Industry Confidence Dips in May
Press release date: May 21, 2012
Depending on the market segment they represent, executives have differing points of view on the current and future outlook for the industry. Independent, Small Ticket
"We continue to experience a weaker demand level than we would have expected at this time. Small business owners seem reluctant to invest in business equipment expansion. After the robust end to 2011, we were hopeful that our customers were ready again to take on new equipment, and with such low interest rates still in place, the financing that we provide. It seems as though, absent stimulus, growth is flat. My concern is that we could see this trend continue until after the elections in November." Valerie Hayes Jester, President, Brandywine Capital Associates Bank, Small Ticket
"Equipment leasing continues to increase as the economy in the United States continues to improve, albeit at a measured pace, especially for small to medium sized businesses. When companies do invest, they are looking for total solutions beyond just the equipment and including all the services that surround it. Those equipment providers that can provide total service-related solutions are seeing a new segment of growth for their business and equipment leasing is an important component of this total solution by providing capital while leveraging expertise in billing and services." Ron Arrington, Global President, Vendor Finance, CIT Bank, Middle Ticket "Generally equipment finance is continuing to improve. Some industries like energy and energy-related are particularly robust. Other traditional equipment industries like construction are slowly improving." Harry Kaplun, President, Frost Equipment Leasing and Finance "We are cautiously optimistic about the improving, short-term opportunity for equipment finance companies serving, large creditworthy borrowers in the United States." Bill Verhelle, CEO, First American Equipment Finance, a City National Bank Company "Many global political and economic headwinds are causing lack of growth. Demand for quality equipment finance transactions is high and there is too much money chasing too few quality deals and as such spreads continue to be pressured." Anonymous Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising. Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey's integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry's confidence. How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents' opinions about the following:
1. Current business conditions
2. Expected product demand over the next four months
3. Access to capital over the next four months
4. Future employment conditions
5. Evaluation of the current U.S. economy
6. U.S. economic conditions over the next six months
7. Business development spending expectations
8. Open-ended question for comment How may I access the MCI-EFI?
Survey results are posted on the Foundation website, www.leasefoundation.org/IndRsrcs/MCI/, included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.