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 $1-trillion equipment finance sector, showed their overall new business volume for September was $9.4 billion, up 12% year-over-year from September 2015. Month-over-month, volume was up 22% from $7.7 billion in August. Year to date, cumulative new business volume decreased 4% compared to 2015.
Receivables over 30 days were 1.31%, relatively unchanged from the previous month and up from 1.10% in the same period in 2015. Charge-offs were 0.46%, up from 0.44% the previous month.
Credit approvals totaled 76.6% in September, down slightly from 76.9% in August. Total headcount for equipment finance companies was up 3.8% year over year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for October is 56.0, an increase from the September index of 53.8.
ELFA President and CEO Ralph Petta said: “September new business volume was strong, showing the first double-digit increase in many months. Perhaps the Fed’s decision to keep interest rates low has contributed to this favorable environment for equipment investment by businesses. The uncertainty caused by the upcoming presidential election, which has acted as a drag on overall economic growth and low capital spending for most of this year, seems to have waned—at least in the short-term. It will be interesting to see if this scenario continues into the final quarter of 2016.”
Stan Walker, managing director, JPMorgan Equipment Finance, said: “The September MILFI-25 data reflected a nice bump in volume activity, although it’s yet to be seen if this is a trend or an anomaly. The lingering uncertainty around interest rate hikes and the upcoming presidential election have left many companies reluctant to move forward on capex spend, so this is definitely welcome news. Despite the unclear environment, our firm has seen strong volume growth for the year and our portfolio credit metrics remain solid. As we head through the fourth quarter there’s definite pent up demand for capital equipment investment, but given the unpredictable domestic environment along with the economic headwinds internationally, we may continue to see this unevenness for several more months.”
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 8 a.m. 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/
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