After April High, Equipment Finance Index Drops 4 Points

After reporting a record high 76.1 index in April, the Equipment Leasing & Finance Foundation says its May Monthly Confidence Index dropped four points to 72.1.

Noting higher vaccination rates, warmer weather and the resumption of most economic activity at pre-pandemic levels this summer, survey respondent Bruce J. Winter, president of FSG Capital commented: “Business owners are much more optimistic and stimulus supported capital spending will likely reach unprecedented levels in the next 12 months. Prolonged inflation risk is a real concern as this untested experiment in rapidly expanding government debt will reach new highs.”

The general mood of respondents seems to be stabilizing from April’s euphoria. Assessing business conditions over the next four months, 54% of equipment finance company executives said they will improve, down from the 73% of respondents who indicated this in April. Another 46% say conditions will remain the same, which was up from 23% in April. No respondents said they would worsen.

Demand of leases and loans to fund capex will increase over the next four months, according to 54% of respondents. This is a decrease from the 70% of respondents who indicated this in April. More than 46% of respondents said demand would remain the same, an increase from 30% of the respondents who indicated this in April.

Other expectations for the next for months, according to the survey:

Access to capital to fund equipment acquisitions: 32% expect more, down from the 43% of respondents who said this in April. 68% say they expect the same access, an increase from 67% who indicated this last month.

Employee hiring: 40% of respondents expect to hire more and 60% say there will be more change in headcount. This compares to April’s numbers of 43% and 57%, respectively.

U.S. economy evaluation: Looking at the next six months, 61% say the economy will get better and 39% expect it to remain the same. April’s numbers were 73% and 23%, respectively, with another 3.3% saying it would worsen. 

ELFF’s Monthly Confidence Index survey goes to a cross-section of 50 equipment finance industry executives representing banks, independents and captive equipment finance companies. The same executives are polled each month.