October New Business Volume Up 3 Percent Year-over-year, Down 8 Percent Year-to-date and Month-to-month
The Equipment Leasing and Finance Association (ELFA); Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $1.046 trillion equipment finance sector, showed their overall new business volume for October was $7.7 billion, down 8 percent from new business volume in October 2014. Volume was down 8 percent from $8.4 billion in September. Year to date, cumulative new business volume increased 3 percent compared to 2014.
Receivables over 30 days were 1.0 percent, down from 1.1 percent the previous month and down from 1.26 percent in the same period in 2014. Charge-offs were 0.27 percent, unchanged from the previous month.
Credit approvals totaled 80.1 percent in October, down slightly from 80.5 percent in September. Total headcount for equipment finance companies was up 5 percent year over year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for November is 60.2, an increase from the previous month’s index of 58.7.
ELFA President and CEO William G. Sutton, CAE, said, “Performance in the equipment finance market was mixed in October: new business volume weakened somewhat—both in terms of the month- and year-earlier periods—while portfolio quality remained steady. Some members report a softening in the demand side of the business and it remains to be seen whether and to what extent the specter of rising interest rates will impact the sector. ”
Anthony Cracchiolo, President and CEO, U.S. Bank Equipment Finance, said, “The markets continue to grow marginally year over year which is favorable. This points to a positive-leaning economy that also shows considerable inconsistency. Credit quality remains strong and at historical levels and the industry is well positioned for solid growth as the economy expands.”
About the ELFA’s MLFI-25
The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at Eastern time from Washington, D.C., each month on the day before the U.S. Department of Commerce releases the durable goods report. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants, is available at www.elfaonline.org/Data/MLFI/
The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 measures monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector, including small ticket, middle-market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector and current business conditions nationally.