The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $521 billion equipment finance sector, showed overall new business volume for September was $5.8 billion, up 23 percent compared to the same period in 2009 and the largest year-over-year increase in two years. The report was released on October 26. New business volume for September increased by 34.8 percent from August’s volume of $4.3 billion.
Year-to-date new business volume is $41.2 billion, up 5.1 percent compared to the cumulative year-to-date total from 2009. New business volume in the third quarter of 2010 compared to 3Q09 experienced 19 percent year-over-year growth, the largest percentage increase in two years.
Credit quality is mixed. Receivables over 30 days decreased to 3.4 percent in September from 4.3 percent in August, the largest year-over-year improvement in two years. This improved picture is accentuated further when the year-earlier receivables data is taken into account. However, losses increased to 1.7 percent in September, up from 1.3 percent in the prior month
The percentage of credit approvals decreased to 72 percent in September, a percentage point down from August credit approvals, which matched the highest approval ratio since September 2008. Fifty-six percent of participating organizations reported submitting more transactions for approval during the month. Finally, total headcount for equipment finance companies was flat during from August to September. Year-over-year employment is down almost 5 percent. Supplemental data shows that construction and trucking assets lead the underperforming sectors.
The Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for October is 58.8, an improvement from 56.9 in September. For more detailed information on the MCI-EFI, visit www.LeaseFoundation.org
ELFA president William G. Sutton said, “While September’s financing volume is indeed encouraging, some ELFA members are still experiencing soft demand. The trends, however, seem to be heading in the right direction.”
“The new business volume increase is indicative of a positive business outlook,” said Steve Grosso, president, and chief operating officer, CoActiv Capital Partners Inc., located in Horsham, Pa. “While it’s not time to claim we are in a robust environment, clearly businesses are starting to invest in capital equipment. In many cases, we see older equipment that is worn out being replaced, or newer technologies being installed. We haven’t seen great large-scale expansion. The technology sector and healthcare seem to be strong versus infrastructure and manufacturing which still remain flat.”
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 9 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 latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at http://www.elfaonline.org/ind/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.
ELFA MLFI-25 Participants
About the ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $521 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its more than 600 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, visit www.elfaonline.org.