Equipment Finance Sector up 24% From Last Year

ELFA: January New Business Up 24 Percent Over Year

The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25) showed overall new business volume for the equipment finance sector in January was $4.2 billion, up 24 percent compared to the same period in 2010.
“After a typical end-of-quarter, end-of-year spike in new business activity, the equipment finance sector seems to be resuming a steady pace of increasing volume,” said ELFA President and CEO William Sutton. “This trend, coupled with a strong outlook by leasing and finance executives about the future of the industry, bodes well for a continued recovery of the sector.”
Credit quality is mixed. Receivables over 30 days increased slightly to 2.8 percent in January from 2.7 percent in December, but declined by 35 percent compared to the same period in 2010. Charge-offs declined significantly, falling to 1 percent from 1.4 percent in December, and also showed improvement over the same period in 2010.
Compared to the year-earlier period, credit standards relaxed as approvals increased to 74 percent in January. And, 56 percent of participating organizations reported submitting more transactions for approval during the month, down from two-thirds of responding organizations in December.
Finally, total headcount for equipment finance companies remained flat for the past three months, and reflected a year-over-year decrease of four percent for January. Supplemental data shows that the construction and trucking sectors once again led the underperforming sectors in January.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index for February is 71.6, a new high since the MCI was launched in May 2009, and an increase from the previous high of 69.7 in January.
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 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/.