Finance Confidence Hits 3-year High

March 18, 2021

The March 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) is 67.7, an increase from the February index of 64.4, and the highest level since April 2018. MCI-EFI is published by the Equipment Leasing & Finance Foundation and serves as an assessment of both the prevailing business conditions and expectations.

Survey respondent David Drury, SVP and head of equipment finance, Fifth Third Bank, said in a prepared statement:

“We are relatively positive on domestic and global economic activity for this year, and likely next. Despite lingering disruptions, with the tailwinds of government stimulus, central bank liquidity, excess capacity, and pent-up demand, global economic growth may positively surprise in 2021. The big question that could change our mind would be a return of inflation, which would change the dovish nature of most global central banks. Higher inflation would lead to higher interest rates and less of an incentive for businesses to borrow and invest.”

Key equipment finance trends

Half of executives responding to the survey said they believe business conditions will improve over the next four months, up from 46.2 percent in February. About 46 percent said they believe business conditions will remain the same over the next four months, unchanged from the previous month.

Demand for leases and loans to fund capital expenditure will increase over the next four months, according to 42.9 percent of respondents. Slightly more than half, 53.6 percent, said they believe it will “remain the same.”

Only 3.6 percent of respondents labeled the U.S. economy as “excellent,” although that was up from none in February. The percentage calling the economy “poor” decreased to 17.9 percent from 23.1 percent in February.

The outlook for the economy also improved among respondents, with 60.7 percent saying they believe that U.S. economic conditions will get “better” over the next six months, an increase from 50 percent in February. Similarly, the percentage that said they believe conditions will worsen dropped from 11.5 percent in February to 7.1 percent.

Source: Equipment Leasing & Finance Foundation