ELFA: Equipment-finance index jumps 16% year-over-year

Feb. 26, 2013
Overall new business volume for January was $5.9 billion

The Equipment Leasing and Finance Assn.’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 January was $5.9 billion-- up 16% from a volume of $5.1 billion in the same period in 2012.

Volume was down 49% from December, which ELFA noted reflected  the “typical end-of-quarter, end-of-year spike in new business activity.”

According to ELFA, the MLFI-25 is the only index that reflects the volume of commercial equipment financed in the U.S. and is released the day before before the Dept. of Commerce issues its durable goods report.

The index shows that receivables over 30 days increased to 1.8% in January after hitting their lowest level in the last two years in December at 1.6%.  They were down from 1.9% in the same period in 2012. Charge-offs came in at an all-time low of 0.3%, down from 0.6% the previous month.

Credit approvals totaled 78.3% in January, down 0.3% from December.  Finally, total headcount for equipment finance companies was up 0.7% from the previous month and increased 0.6% year-over- year.

Separately, the Equipment Leasing & Finance Foundation'sMonthly Confidence Index(MCI-EFI) for February was recorded at 58.7. That marks an increase from the January index of 54.2, “reflecting industry participants’ increasing optimism despite a wary eye on economic conditions and government management of fiscal policies,” according to the foundation. 

“The year begins where 2012 left off—on a positive note—as new business volume continues to trend in a positive direction,” observed ELFA president & CEO William G. Sutton. “A flurry of activity at the end of the year gave way to more moderate growth in January. 

“MLFI-25 participants also indicate strong credit quality metrics as both losses and delinquencies improved over the year-earlier period,” he continued. “This good news belies an overhang of continued uncertainty that lingers in the marketplace, as policymakers in Washington continue to struggle with fiscal matters, which only serves as a damper to economic growth.”

 “We remain optimistic for industry growth as enterprise and government entities increasingly utilize leasing and financing offers to help keep pace with technology change,” noted Irv Rothman, president & CEO of  Berkeley Heights, NJ-based HP Financial Services.

“With rapidly evolving business and IT demands, we continue to see interest from customers for the flexibility leasing, financing and lifecycle asset management provides,” he added.

According to ELFA, the MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S.

“The index 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,” stated ELFA. “Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy, covering equipment produced, acquired and financed.”

The latest MLFI-25, including methodology and participants is available at http://www.elfaonline.org/Research/MLFI/.

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