After hitting a historic low of 22.3 in April, the Equipment Leasing & Finance Foundation announced Thursday its monthly confidence index for the equipment finance industry rose to 25.8 in May.
The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector.
The foundation states data compiled from this month’s index include:
- When asked to assess their business conditions over the next four months, 3.3 percent of executives responding said they believe business conditions will improve over the next four months, down from 6.9 percent in April. 10 percent believe business conditions will remain the same over the next four months, an increase from none the previous month. 86.7 percent believe business conditions will worsen, a decrease from 93.1 percent in April.
- Nearly 7 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, relatively unchanged from April. Another 6.7 percent believe demand will “remain the same” during the same four-month time period, an increase from 3.5 percent the previous month. 86.7 percent believe demand will decline, a decrease from 89.7 percent in April.
- None of the respondents expect more access to capital to fund equipment acquisitions over the next four months, unchanged from April. 73.3 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 53.6 percent last month. 26.7 percent expect “less” access to capital, a decrease from 46.4 percent the previous month.
- When asked, 16.7 percent of the executives report they expect to hire more employees over the next four months, an increase from 6.9 percent in April. Additionally, 60 percent expect no change in headcount over the next four months, a decrease from 69 percent last month. 23.3 percent expect to hire fewer employees, down from 24.1 percent the previous month.
- None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. Only 10 percent of the leadership evaluate the current U.S. economy as “fair,” up from none in April, and 90 percent evaluate it as “poor,” down from 100 percent last month.
- 20 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 27.6 percent in April. 30 percent indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 6.9 percent last month. 50 percent believe economic conditions in the U.S. will worsen over the next six months, down from 65.5 percent the previous month.
- In May, 23.3 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 17.2 percent last month. 33.3 percent believe there will be “no change” in business development spending, down from 48.3 percent in April. 43.3 percent believe there will be a decrease in spending, an increase from 34.5 percent last month.
In responding to the survey for the index, Bruce J. Winter, president, FSG Capital, said, “The actions by Congress and the Federal Reserve have gone a long way to increasing confidence in our economy and financial markets. This will be a long road, with losers and winners, and only time will tell how our economy and way of life is changed after this health crisis is resolved.”
COVID-19 impact survey results released
The Foundation also released Thursday highlights of its newly launched COVID-19 impact survey of the equipment finance industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry.
From 101 survey responses collected from May 4-8, the foundation says results show that 93 percent of equipment finance companies have offered payment deferrals. A large majority (88 percent) of companies have not furloughed or laid off employees.
More information about the survey can be found on the foundation’s website.