Farm Industry News Blog

Equipment lease foundation sees confidence rise

Index of executives involved in equipment leasing see continued demand and available funds in latest survey.

The folks at the Equipment Leasing and Finance Foundation publish a monthly confidence index for the industry, and while we don't report on it all the time, this one is worth at least mentioning because the news continues to be good. The index collects leadership data to report an assessment of both prevailing business conditions and expectations for the future as reported by key executives. The equipment finance sector is a $725 billion business and overall confidence index in the market is up to 59.4, up from 57.3 last month.

It appears equipment optimism continues to rise. For those in agriculture, the news has been good for some time, even as the yellow lines (construction equipment) at major equipment makers were soft. Now that construction is on the upswing - really is there no road or bridge they're not working on - its bolstering confidence for the industry.

The release touting the index quoted Russell Nelson, president, CoBank Farm Credit Leasing, and he notes that demand for replacement/additions  of equipment and facilities remains steady to increasing, with "rising interest rates and equipment costs accelerating capital expenditures through the remainder of 2013. We have growing confidence that the economy and business climate will post modest improvement during the next 18 months."

To get to that 59.4 index there are some key indicators, which the foundation outlined in its announcement. First it notes that a quarter of executives responding say they believe business conditions will improve over the next four months, and that's up from just under 20% in June. About 72% say conditions will remain level for the next four months. And those that believe business conditions will worsen has declined sharply from nearly 10% now down to $3.1%.

While the index is up there are some signs that continued growth may slow a bit. Just over 15% of survey respondents say demand for leases and loans to fund capital expenditures will rise over the next four months, and that's down from 19.4% in June. More than 81% believe demand will 'remain the same' during that time period, up from 71% the previous month. At the bottom just 3.1% see a decline in capital expenditures versus nearly 10% in June.

One hold back on the equipment market was availability of funds. After the 2008 collapse lending fell apart too. It's clawing its way back and this latest survey also shows that nearly 22% of executives expect to see more access to finding for acquisitions, which is up from just over 19% in June.

These index reports offer a glimpse into issues that impact the market. Continued strength in the heavy equipment market is a continued sign that the economy is moving forward. In fact, in this latest survey more than a third of respondents say U.S. economic conditions will get better over the next six months. Just over one-fifth felt that way in June. You can check all the results here.

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The Farm Industry News Blog features commentary from Willie Vogt, Jodie Wehrspann, Kathy Huting, Lynn Grooms, Daryl Bridenbaugh and Jeff Ryan.

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