Equipment leasing & finance industry confidence eases in October

Confidence in the equipment-finance market dipped in October, according to a new national industry report. 

An index measuring overall confidence in the sector slipped to 55.0, down slightly from a reading of 56.5 in September, which had been the highest index number in seven months amid the COVID-19 crisis. That’s according to the October 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). 

The index, issued by the Equipment Leasing & Finance Foundation, 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. 

When asked to assess their business conditions over the next four months, nearly 30 percent of executives responding said they believe business conditions will improve over the next four months, down from almost 36 percent in September. The survey found almost 52 percent believe business conditions will remain the same over the next 120 days, an increase from more than 46 percent the previous month. Meanwhile, 18.5 percent believe business conditions will worsen, up slightly from almost 18 percent in September.

The survey found that 22 percent of respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from almost 29 percent in September. Nearly 67 percent of respondents say demand will “remain the same” during the same four-month period, an increase from 64 percent the prior month. Meanwhile, 11 percent of industry executives say demand will decline, an increase from 7 percent in September. Full survey results are available at https://www.leasefoundation.org/industry-resources/monthly-confidence-index/.

The foundation also released highlights of its COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the effects of the coronavirus pandemic on the equipment-finance industry. It collected 76 survey responses from October 1-12 on a range of topics, including payment deferrals, defaults, and staff analysis. 

The survey found that 56 percent of companies expect that the default rate will be greater in 2020 than in 2019, down from 73 percent in September. Meanwhile, 35 percent anticipate it to be the same compared to 20 percent in September, and 9 percent expect the default rate to be lower, compared to 7 percent a month prior. Only 7 percent of lenders reported having more than 10 percent of their portfolio now under deferral, down from 15 percent of lenders in September. 

Additional survey results and analysis are available at https://www.leasefoundation.org/industry-resources/covid-impact-survey/.