September New Business Down 6% Year-over-year; Up 20% Month-to-month; Up 6% Year-to-date
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 September was $7.7 billion, down 6% compared to volume in September 2012. Month-over-month, new business volume was up 20% from August. Year to date, cumulative new business volume increased 6% compared to 2012.
Receivables over 30 days were at 1.5% in September, down slightly from 1.6% in August. Delinquencies declined from 1.8% in the same period in 2012. Charge-offs were unchanged from August at 0.4%, and only slightly higher than the previous five months’ all-time low of 0.3%.
Credit approvals totaled 77.3% in September, down from 79.1% the previous month. Fifty-six percent of participating organizations reported submitting more transactions for approval during September, unchanged from the previous month.
Finally, total headcount for equipment finance companies was up 1.2% year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for October is 54.0, a decline from the September index of 61.3, demonstrating the negative impact of the federal government’s budget response on an otherwise steady industry outlook.
ELFA President and CEO William G. Sutton, CAE, states: “September’s year-over-year drop in new business volume seems to reflect a pull-back in corporate confidence in the U.S. economy spawned by the fiscal crisis in Washington. Uncertainty created by the inability of policy makers to come together to agree on sustained tax and spending policy is holding back the U.S. economy, and in particular, capital investment. The equipment finance industry and our members look forward to getting past this crisis and on with the business of supporting sound growth policies that stimulate capital formation, stabilize the capital markets, and, ultimately, strengthen our economy.”
Daniel Krajewski, vice president, business development, Direct Capital Corp. says, “After an expected decline in the summer months there was a healthy rebound in activity in September, which exceeded the early Q2 spike. We remain cautiously optimistic about the continued growth in the sector and are encouraged to see that average delinquency metrics remain low. We believe that we will close out the year strong, but are consistently monitoring the economic and governmental issues that may impact demand.”
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 below and also at http://www.elfaonline.org/Research/MLFI/
The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 measures monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector, including small ticket, middle-market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector and current business conditions nationally.