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 $903 billion equipment finance sector, showed their overall new business volume for October was $8.3 billion, up 9 percent from new business volume in October 2013. Month over month, new business volume was down 12 percent from September. Year to date, cumulative new business volume increased 8 percent compared to 2013.
Receivables over 30 days increased from the previous month to 1.2 percent, and were up from 0.9 percent in the same period in 2013. Charge-offs were unchanged for the seventh consecutive month at an all-time low of 0.2 percent.
Credit approvals totaled 78.3 percent in October, a decrease from 79.7 percent the previous month. Total headcount for equipment finance companies was up 0.7 percent year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for November is 64.2, an increase from the October index of 60.4 and the highest level since May.
ELFA President and CEO William G. Sutton, CAE, said: “ELFA members report strong growth in new business volume, albeit tempered by continued margin compression in many sectors. The U.S. economy continues to expand at a modest rate, providing a welcome stimulus for investment in business equipment. Portfolios are performing relatively well, although delinquencies are showing some slight volatility. Most economic indicators—lower fuel prices, reduced unemployment and a robust equity and bond market—all point to a strong fourth quarter, absent some unforeseen development.”
Michael Doyle, President, BTMU Capital Leasing and Finance, Inc., said, “The solid growth in October year-on-year new business volume is evidence of a fairly robust capital expenditure environment. We see this trend continuing into a strong fourth quarter, with the possible exception of those markets related directly to petroleum exploration and development. These markets will continue to be negatively affected if low oil prices persist. Stronger sectors include those involving transportation assets and information technology equipment and software. Generally, we are seeing consistent credit discipline, but this has not yet translated into a more stable pricing environment. We expect that margin compression will continue to be an issue in the fourth quarter as lessors look to book volume to meet their 2014 budgets.”
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.
To read the full rerport, click here.