Financial Technology

Financial Technology

February 25, 2013

Equipment Lease Finance Industry Sees Upward Trend

The equipment finance sector is a $725 billion market, and the overall confidence of key executives in this industry sheds light on the course it takes during the coming months. The survey is conducted by the Equipment Leasing & Finance Foundation, and its February 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) revealed an upward trend that has been sustained for three consecutive months. The executives are optimistic even though the global economy and governmental fiscal policies are putting in place austerity measures in many countries around the world. The February confidence index was at 58.7 compared to that of January which was at 54.2.

Confidence in the US economy is critical, because any downturn here affects other economies. The capital market is an important component to the equipment finance industry. Gauging the confidence has been a good indicator in the past and when it is high consumers and businesses purchase more goods and invest accordingly. If confidence is low the risk takers don’t take the same chances and spending decreases accordingly.

The MCI-EFI seeks to find these answers by surveying a wide cross-section of industry executives including small ticket, middle market and large ticket banks as well as independent and captive equipment finance companies. The survey is made up of the same pool of 50 organization leaders every month to ensure a consistent indicator of the industry’s confidence.

The survey is made up of seven questions as well as comments and opinions regarding those questions. The trends are: current business conditions, expected product demand over the next four months, access to capital over the next four months, future employment conditions, evaluation of the current U.S. economy, U.S. economic conditions over the next six months, business development spending expectations and an open-ended question for comment.

"The industry continues to look stable and positioned on solid footing for future growth. The replacement economy is well under way. However, expansion of the markets is still questionable. The next several months will tell the story for 2013 and answer the question of whether 2013 will see moderate or significant growth. In either case, the equipment finance industry will be on the leading edge of the overall economy," said MCI survey respondent Anthony Cracchiolo, president and CEO, Vendor Services, U.S. Bank Equipment Finance.

Business conditions over the next four months will improve according to 20 percent of executives, which is up from 6.1 percent in January, while 77.1 percent of the respondents believe business will remain the same and 2.9 percent said conditions will get worse. Regarding the question of hiring more employees, 22.9 percent expect to hire more employees, 65.7 percent will see no changes and 11.4 percent expect fewer employees.

The foundation is a 501c3 not-for-profit organization that provides information for the equipment leasing and finance industry through research and future-focused data from an in-depth independent research for the leasing industry.

Edited by Brooke Neuman

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