The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which measures economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, indicated that overall new business volume in March hit $8.9 billion, up 10% year-over-year compared to the same month in 2016.
From February to March this year, equipment leasing activity is up 51% month-to-month, while year-to-date, cumulative new business volume jumped 4% compared to 2016.
“Responding companies report surprisingly strong end-of-quarter volume, despite a sluggish first quarter economic growth projection by the Atlanta Federal Reserve Bank,” noted ELFA President and CEO Ralph Petta in a statement.
“The central bank’s recent rate hike may, in part, be responsible for the spike in equipment demand as businesses seek to lock in fixed rate financing ahead of steadily increasing interest costs,” he pointed out. “Hopefully, this growth trend takes hold and continues into the spring and summer months.”
Yet Daryn Lecy, vice president of operations for the equipment finance division at Stearns Bank NA, added that year-to-date data is “signaling” some signs of a slightly tougher credit environment with higher year-over-year delinquencies and charge-offs combined with lower credit approval percentages.
“This more than likely demonstrates a return to historic norms relative to the record lows we experienced in recent years rather than a deterioration of credits as a whole,” he stressed.
“The increased overall funding volume and contagious optimism surrounding the construction industry presents some real excitement throughout 2017,” Lecy emphasized. “In addition, future infrastructure spending, paired with a possibility of less regulation, presents more reasons for industry enthusiasm throughout the year ahead.”