Confidence in the equipment finance market declined from November to December according to the most recent report from the Equipment Leasing & Finance Foundation. December’s rating was 48.5, a decrease from the November Index of 49. The change reflects industry participants’ concerns regarding the impact of fiscal issues on capital expenditures, according to the Foundation, despite an overall sense of optimism in the equipment finance industry.
5.9% of executives responding to the survey said they believe business conditions will improve over the next four months, down from 9.1% in November. On the contrary, 73.5% of respondents noted that they believe business conditions will remain the same over the next four months, up from 69.7% in November, while 20.6% said they believe business conditions will worsen, down from 21.2% the previous month.
Respondents also reported feeling somewhat gloomier about the demand for leases and loans, any easing in access to capital and hiring additional workers.
8.8% of survey respondents said that they believe demand for leases and loans to fund capital expenditures will increase over the next four months, a decrease from 12.1% in November. 58.8% noted that they believe demand will “remain the same” during the same four-month time period-- down from 63.6% the previous month. 32.4% reported that they believe demand will decline, up from 24.2% in November.
6.5% fewer executives also said that they expect more access to capital to fund equipment acquisitions over the next four months than they did a month ago. 85.3% of survey respondents indicate they expect the “same” access to capital to fund business, an increase from 72.7% the previous month. No one expects “less” access to capital, down from 6.1% who expected less access to capital in November.
Although fewer respondents noted in the December survey that they expected to actually see headcount reductions in the next four months as compared to the November survey, nearly ten percent fewer executives said that they expected to hire any more employees during the period covered. 64.7% expect no change in headcount over the next four months, up from 54.5% last month. 11.8% expect fewer employees, down from 12.1% of respondents who expected fewer employees in November.
More respondents also rated the economy as” poor” overall in December—down from the tepid rating of “fair:” in November. To be specific, 76.5% of the leadership evaluated the current U.S. economy as “fair,” down from 78.8% last month. 23.5% rate it as “poor,” up from 21.2% in November.
Although 11.8% of survey respondents said they believed that U.S. economic conditions will get “better” over the next six months (up from 6.1% in November), 55.9% of survey respondents indicated they believe the U.S. economy will “stay the same” over the next six months, down from 66.7%. 32.4% believe economic conditions in the U.S. will worsen over the next six months, an increase from 27.3% who believed so last month.
When asked about the outlook for the future, survey respondent Russell Nelson, president, Farm Credit Leasing Services Corporation,observed that, “Regardless of actions or no action by Congress to address the fiscal cliff and extension of the Bush tax cuts, the equipment finance industry will be proactive in offering creative, innovative and reliable products and structures to retain its market share of financing needs, and remain an integral part of available finance solutions to all customers.”
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research.