Highlights from the Equipment Leasing & Finance Association CapEx Finance Index:
- FORECAST: Our forecast framework, which uses past values of CFI and durable goods orders to predict future changes in topline durable goods orders, expects a 0.47% contraction in new orders in February.
- Total new business volume (NBV) rose by $9.7 billion seasonally adjusted among surveyed ELFA member companies, an increase of 3.7% from the prior month.
- NBV year-to-date contracted by 3.7% relative to the same period in 2024.
- The year-over-year change declined by 7.4% on a non-seasonally adjusted basis.
- Charge-offs (losses) rose to 0.55%, near the two-year high seen last November.
“The latest CFI release showed a return to normalcy in February. Demand for equipment returned to healthy levels after whipsawing the last few months due to a historic swing in financing activity at banks,” said Leigh Lytle, President and CEO at ELFA. “Financial conditions weakened a little as losses rose, but accounts past 30 days remained low, and new applications remained strong. 2025 is shaping up to be bumpy, but so far, the data indicates that demand for investment equipment has weathered the storm. We’re closely watching financial conditions for signs of erosion, but we expect the industry to have a solid year as long as the economy avoids a recession.”
New business volumes rebounded. Volumes increased on a seasonally adjusted basis, posting a similar level of new business activity as the previous two February reports. Activity grew at banks and captives, with new business volumes expanding month-over-month by 0.9% and 15.0%, respectively. Financing at independents dropped by 6.4% after growing by 8.6% in the previous month. Despite the cooling, financing activity at independents has gained ground over the last five years. From 2017 to 2019, independents comprised roughly 16% of all new business activity. That number jumped to 20% of all activity from January 2024 through February 2025. The share of activity at captives also increased by around 2.25 percentage points, while bank activity fell by almost 7.5 percentage points.
The pace of job losses slowed. After picking up speed for three months, the pace of job losses slowed in February. The sector was still down 2.4% over the last 12 months, mainly driven by a 6.4% contraction in employment at captives. Banks also experienced a 1.6% loss in headcount over the last year, while independents saw employment rise by 1.0%.
Credit approvals continue to hover around 75%. The average credit approval rate dropped to 75.4%, a decline of roughly half a percentage point. However, the rate remains well above the levels seen at the end of 2024.
Financial conditions somewhat weakened. Aging receivables over 30 days dropped back down to 2.0%, a decline of 0.2 percentage points. However, charge-offs (losses) rose to 0.55%, the second-highest level in the last two years. The increase in losses was driven by a rise in charge-offs at independents and banks. While the average loss rate rose, the loss rate for small ticket activity dropped after a notable jump in the prior month.
“KeyBank remains optimistic as credit quality continues well within historical norms, capital is abundant and the desire for earning assets is strong,” said Peter Bullen, Executive Vice President & Group Head, Key Equipment Finance. “We are also encouraged to see a significant rebound from Key Equipment Finance clients in equipment financing demand compared to last year at this time. At the same time, we remain vigilant of the potential impact of new tariffs and general economic uncertainty on capital spending.”
Industry Confidence
The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, dropped to 58.1 in March, as respondents grew slightly more pessimistic about conditions over the next four months.