The Equipment Leasing & Finance Association’s (ELFA) Monthly Confidence Index (MCI) has dipped in August to be 62.4, down 1.3 points month-on-month, but still within the elevated range of the past six months.

The MCI is a qualitative assessment of the USD1.3 trillion equipment finance sector produced by the ELFA, based on the survey responses of those working in the industry.

When asked to assess business conditions for the next four months, 65.2% of August survey respondents believe they will remain the same, a significant drop from 72.7% in July. Just 8.7% believe conditions will worsen, up from July’s 4.6%, while 26.1% believe conditions will improve, an increase from July’s 22.7%.

Capex demand for the next four months is expected by 73.9% of survey respondents to remain the same, a notable jump from July’s 66.7%. While 26.1% believe capex demand increase, down from 28.6% in July, no survey respondent for the month believes demand will drop, which is down from 4.6% in July.

When looking at the US economy 4.8% evaluate it as excellent, down for 15% in July, while 95.2% assess it as “fair,” up from 80% last month. None assess the US economy as poor, down from 5% in July.

When it came to the US economic outlook, 59.1% believe it will stay the same, down from 63.6% in July while 18.2% believe economic conditions will get better, down from 22.7% last month.

David Normandin, CEO with Wintrust Specialty Finance says: “As recent activity reporting illustrates, new business volume is increasing and portfolio performance is good. While uncertainty in the economy, rates, politics and world events continues, business volume and performance is a true indicator of the market’s view of the future and it is positive. We have experienced a strong first half of the year and expect the second half to be strong for our business at Wintrust.”

 Jeffry Elliott, CLFP, CEO, Elevex Capital, has a different take.

“I'm pessimistic on the economy and bullish on our industry — those aren't in conflict; they're the same thesis viewed from two ends,” he says. “Equipment doesn't stop wearing out because the macro picture gets complicated; what changes is how it gets financed, and a rising-rate, high-inflation environment is where true leasing earns its keep. 

“My number one concern is supply chain risk, and I don't think our industry has priced it: lessees whose equipment sits idle waiting on a part still owe the payment, and uptime is collateral performance. We're deploying our pre-recession playbook now, not later — discipline purchased early is cheap; purchased late, it isn't available at any price.”