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2/24/2012



Rail News: Rail Industry Trends

Business confidence level up a tad among equipment finance sector constituents, foundation survey shows


The equipment finance industry’s monthly confidence index for February reached 59.6, up slightly from January’s 59.0 index, indicating industry participants’ optimism remains steady despite a cautious global economic outlook, according to the Equipment Leasing & Finance Foundation. The index is a qualitative assessment of prevailing business conditions and future expectations based on the foundation's survey of executives in the $628 billion equipment finance sector.

When asked to assess their business conditions over the next four months, 23.5 percent of the survey respondents said they believe business conditions will improve, up from 18.4 percent in January. More than 73 percent of the respondents believe business conditions will remain the same, down from 76.3 percent in January, and 2.9 percent said business conditions will worsen, down from 5.3 percent in January.

In addition, 26.5 percent of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, up from 18.4 percent in January, while 67.6 percent said demand will remain the same (down from 76.3 percent in January) and 5.9 percent indicated demand will decline (up from 5.3 percent in January).

The survey also shows that 20.6 percent of respondents expected more access to capital to fund equipment acquisitions over the next four months, down from 21.1 percent in January.  Nearly 80 percent indicated they expect the same access to capital versus 78.9 percent in January and no respondents anticipated less access to capital.

When asked if they expected to hire more employees over the next four months, 26.5 percent of the respondents said they do, down from 31.6 percent in January. More than 70 percent anticipated no change in headcount (up from 63.2 percent in January) and 2.9 percent projected fewer employees (down from 5.3 percent in January).
 
Meanwhile, 26.5 percent of respondents expected their company to increase spending on business development activities during the next six months, down from 34.2 percent in January. More than 73 percent anticipated no change in business development spending (versus 65.8 percent in January) and no respondent projected a spending decrease.

“Continued signs of economic recovery and modest expansion occurring across an increasing number of industries are driving new and replacement capital expenditures, supported by flat interest rate growth,” said Russell Nelson, president of Farm Credit Leasing Services Corp. and a survey respondent, in a statement released by the Equipment Leasing & Finance Foundation. “The current outlook would indicate strong growth in loan and lease demand for equipment finance through 2012.”


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