Despite Recent Boom, Confidence In Equipment Industry Flagging

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The equipment industry has been one of the few bright spots of a muddled 2011, showing month-over-month growth from January on. This should be a good time for those folks, even as the economy is gaining about as much traction as a spider in slippers on a mountain made of butter.

Yet optimism is starting to flag. There’s a tremendous disconnect between what the industry is actually doing (volume is up 30 percent over a year ago for May) and what those in the industry perceive and worry is going to happen (a recent optimism index was down ten points from 63.2 to 52.6).

I’ll now ask one of my favorite questions, namely, what gives? The head of the Equipment Leasing and Finance Association, one of the most well-connected in the industry, has an answer for us:

ELFA President and CEO William G. Sutton, CAE, said: “Directionally, there is good news both in the amount of new business generated during the period and the rebound in credit quality. However, some industry sectors continue to lag, and an atmosphere of uncertainty prevails.”

“New business volume improvements continue but in an uneven manner across different industries,” said Harry Kaplun, President, Frost Leasing, located in San Antonio, TX. “This lack of a uniform trend suggests some weakness in the overall recovery. If the recovery can be more universal, the current availability of capital and improving portfolio performance have the equipment finance industry well positioned to serve the future needs of U.S. industry.”

The lesson here? Confidence is a fickle thing, even when everything is going well. It’s also further proof that we need a full-fledged economic recovery to put people at ease, no matter how their segment of the market is doing.

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Photo credit to Jaitas at http://www.sxc.hu/photo/1040202

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