The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $725 billion equipment finance sector, showed their overall new business volume for November was $6.4 billion, up 3% from volume of $6.2 billion in the same period in 2011. Their volume was down 16% from the previous month, and their year-to-date cumulative new business volume increased 15%.
Receivables over 30 days increased for the first time in six months to two percent, up from 1.7% in October, and they were unchanged when compared to the same period in 2011. Charge-offs were up from the previous month at 0.5%, and down by 28.6% compared to the same period last year.
Credit approvals totaled 77% in November, down from 79.5% in October. Forty-six percent of participating organizations reported submitting more transactions for approval during November, down from 66% the previous month.
Finally, total headcount for equipment finance companies was down 1% from the previous month, and declined 2% year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for December is 48.5, a decrease from the November index of 49.9, reflecting industry participants’ concerns regarding the impact of fiscal issues on capital expenditures, despite an overall sense of optimism in the equipment finance industry.
“New business volume in the equipment finance sector of the U.S. economy continues to show slow, but steady, growth. Credit quality and portfolio performance also trend positively as delinquencies and losses remain under control for MLFI-25 respondents," said William G. Sutton CAE, president and CEO of ELFA. "We are hopeful that, as recent ‘fiscal cliff’ negotiations between the White House and the Congress seem to be entering a decisive phase, businesses will interpret this as a sign that the economy gradually will pick up steam and is poised for a more robust recovery. Only with a confident business sector will the equipment finance marketplace thrive and, indeed, expand, as investment spending strengthens going forward.”
“For much of the year, we at GreatAmerica Financial Services had experienced a solid increase in our overall commercial equipment lease volume from throughout the country; however, as we edged our way into the fourth quarter we began to feel the effects of the lack of clarity in Washington regarding the budget deficit, " said Tony Golobic, chairman and CEO of GreatAmerica Financial Services. "Without question, concerns about the ballooning budget deficit and the resulting lack of tax clarity are causing indecision related to new capital expenditures within the business community. While cautiously optimistic with respect to the underlying economy, we certainly need to have greater clarity on the new tax structure and where the spending cuts will be positioned. To the extent there is some business-friendly clarity, I believe we will see a return to the type of growth we had seen earlier in the year.”
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