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Survey of economic activity: monthly leasing and finance index

Manufacturing Group | April 25, 2014

March new business volume up 3% year-over-year, up 30% month-to-month, up 6% year-to-date.

Survey of economic activity: monthly leasing and finance index

Washington, DC – 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 $827 billion equipment finance sector, showed their overall new business volume for March was $7 billion, up 3% from new business volume in March 2013. Month-over-month, new business volume was up 30% from February. Year to date, cumulative new business volume increased 6% compared to 2013. 

Receivables over 30 days increased to 2.1% from 1.8% the previous month, and were up slightly from 2.0% during the same period in 2013. Charge-offs were down at a new all-time low of 0.2% from 0.4% the previous month.

Credit approvals totaled 77.8% in March, an increase from 75.3% the previous month. Sixty-five percent of participating organizations reported submitting more transactions for approval during March, an increase from 53% during February. 

Finally, total headcount for equipment finance companies was up 4.4% year over year.

Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for April is 65.1, remaining at the highest index level in two years for the second consecutive month. 

ELFA President and CEO William G. Sutton, CAE, said: “Equipment finance companies in almost all industry sectors are reporting a strong first quarter of the year. The March data showing new business volume clearly provides evidence of a strong first quarter looking back and a positive forecast for future activity. The Federal Reserve recently hinted at continuing a monetary policy that will promote a sustained low interest rate environment at least for the foreseeable future, which is giving the business community a reason to feel confident about the overall trajectory of the U.S. economy and make capital investments in their businesses. Credit quality metrics are mixed, with delinquencies edging upward counterbalanced by monthly losses reaching historic lows. Another positive sign for the industry is the trend toward increased hiring during the past 10 months.”

Brian J. Griffin, Senior Vice President, Leasing, MB Financial Bank, N.A., said, “The continued strong metrics measured by the MLFI-25 reflect the ongoing strength of the economy and, more specifically, the leasing industry. Of particular significance is the dramatic increase in new business volume from February, the record low charge-off percentage and the continued increase in headcount in the industry. If medium- and long-term rates can remain relatively stable, these results bode well for continued growth for the balance of the year.”

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/ 

For a video of the MLFI for Q1 2014, please visit http://youtu.be/UuyYiQMqBf4.

Source: The Equipment Leasing and Finance Association

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