The US May Monthly Confidence Index for the Equipment Finance Industry (MCI) has continued its upward trajectory to sit at 59.9, an increase of 5.3 points month-on-month (m-o-m), to suggest confidence continues to grow in the sector.

The MCI is a qualitative assessment of the USD1.3 trillion equipment finance sector produced by the Equipment Leasing & Finance Association (ELFA), based on the survey responses of those working in the sector.

When asked to assess business conditions for the next four months, 27.3% of survey respondents believe they will improve, up from 11.8% in April, while 63.6% believe they will remain stable, up from 58.8% last month.

Capex demand for the next four months is expected to increase, according to 26.1% of respondents, a big jump from April’s 10.5%, while 73.9% believe it will stay the same (up from 68.4% in April). None believe capex demand will decline, which is also a significant drop from April’s 21.1%.

The US economy was judged as excellent by 9.1% of respondents, up from none last month, while 90.9% assess it as fair, down from 94.4% in April.

When asked about the economic outlook for the next six months, 30.4% believe it will “get better”, up from 15.8% in April, with 47.8% expecting the US economy to “stay the same,” relatively unchanged from last month.

Survey respondent, Charles Jones, senior vice president, 1st Equipment Finance, says: “Despite geopolitical events and high oil, the economy is still reacting positively. In many ways, we are in unchartered territory. Though we are cautious about the future, we remain optimistic.” 

Jeffry Elliott, CLFP, CEO, Elevex Capital, adds: “Energy shock, inflation and recessionary fears will reduce capex spending, but raise yields as conservative lenders pull back from lending, leaving less competition for remaining required capex spending. Some business models will thrive in this type of economy; equipment finance is one that can operate quite well.”