Equipment leasing sector positive on growth

A volatile stock market and the aftermath of US tax reforms have seen confidence in the equipment leasing sector dip slightly, according to the latest analysis from the Equipment Leasing & Finance Foundation.

Its monthly confidence index for the equipment finance industry (MCI-EFI) currently stands at 72.2 for March, easing slightly from the 73.2 score reported in February.

When asked about the outlook for the future, MCI-EFI survey respondent Anthony Cracchiolo, president and CEO, US Bank Equipment Finance, said: “We are seeing growth in capex spending across a broad segment of the economy.

“While some areas are expanding more quickly than others, all are moving in a positive direction. Businesses are more positive then we have seen in over a decade and activity is picking up momentum. The equipment finance industry is healthy and poised to support the expanding economy.”

Michael Romanowski, president, Farm Credit Leasing Services Corporation, signalled a note of caution, saying: “We are still experiencing customers digesting the tax reform changes and how this will impact their decisions on buy versus lease. In some cases, this has delayed purchasing decisions or project start dates.”

However, Valerie Hayes Jester, president, Brandywine Capital Associates, reported: “In spite of the gyrations of the stock market, our customers seem poised to grow their businesses. We have experienced more demand for expansion projects in the last few months than in all of 2017.

“That type of optimism fuels a strong demand for financing products. Tax reform and interest rates that continue to be favorable, in spite of increases recently, should create strong growth for 2018.”

When asked to assess their business conditions over the next four months, more than half (54.8%) of executives responding to the survey said they believe business conditions will improve, an increase from 46.4% in February.

Two-thirds (67.7%) of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, unchanged from February.

Respondents are feeling positive about future prospects, as 29% of the leadership polled now evaluate the current US economy as “excellent,” up from 25% last month, while the corresponding proportion who feel it is only “fair” has dropped to 71%, down from 75% in February.

Most (51.6%) are expecting the US economy will “stay the same” over the next six months, an increase from 35.7% the previous month, and the proportion expecting it to worsen has decreased slightly at 3.2%, down from 3.6% in February.