The Equipment Leasing and Finance Association released the March 2025 CapEx Finance Index (CFI). Highlights from the Index include:
- FORECAST: Growth in new business volumes suggests a 1.5% rise in new durable goods orders in March.
- Total new business volume (NBV) rose by $10.4 billion seasonally adjusted among surveyed ELFA member companies, an increase of 7.0% from the prior month.
- NBV year-to-date contracted by 0.8% relative to the same period in 2024.
- Year-over-year, NBV grew by 9.8% on a non-seasonally adjusted basis.
- Charge-offs (losses) rose to 0.60%, the highest level since September 2020.
“The CFI sent conflicting messages in March. New equipment demand rose for the second consecutive month and was in line with its recent two-year trend,” said Leigh Lytle, President and CEO at ELFA. “However, financial conditions weakened, with aging receivables increasing and the average loss rate rising to its highest level in nearly five years. Economic uncertainty remains exceptionally elevated, and the rise in charge-offs may be an early indication that end-users are experiencing financial stress. The strength in equipment demand should not be understated – the sector is on solid ground – but I’ll be watching the financial data closely for signs of further deterioration as we enter what is expected to be a volatile spring and summer.”
New business volumes rose for the second consecutive month. Volumes continued to make up ground after a disappointing start to the year. New business activity grew by 7.0%, the third-highest growth rate in the last two years. The small ticket index shot up by 21.7%, surpassing the hot February rate of 15.9%. Financing activity picked up across institution types, with banks and captives posting double-digit monthly growth rates, while activity at independents expanded by just over 2%. Volume growth at banks surged over the last 12 months, reaching a yearly growth rate of 32.3%. Activity at captives and independents shrank over the same period.
The pace of job losses quickened. Employment levels in the equipment financing industry dropped 2.7% over the 12 months ending in March. Job losses were broad-based, with all three institution types reporting a yearly contraction in employment.
Credit approvals rose to the highest level since August 2024. The overall credit approval rate rose to 76.0%, an increase of almost 0.7 percentage points. The rate remains above the recent two-year average of 75.5%.
Financial conditions weakened further. Aging receivables over 30 days rose to 2.3%, an increase of a quarter of a percentage point. Aging receivables increased at banks and independents but declined at captives. Charge-offs rose for the second consecutive month to 0.60%, the highest loss rate since September 2020. The trailing six-month average rose to 0.50% and has been trending up over the last five months. It is now more elevated than at any point from 2015 through 2019.
“Industry new business volume of $10.4 billion was very strong in March, which may represent a pull-forward of equipment orders ahead of tariffs going into effect,” said Alan Sikora, CEO of First American Equipment Finance, an RBC / City National Company. “As some clients are cautious due to economic uncertainty, the equipment leasing and finance industry will continue to play a key role in helping organizations navigate their changing environment.”
Industry Confidence
The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, dropped to 41.9 in April from 58.1 the previous month, as tariffs spur uncertainty about conditions over the next four months.
More detail on the data and methodology can be found at www.elfaonline.org/CFI.