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Equipment Leasing and Finance Association’s Survey of Economic Activity: May Monthly Leasing and Finance Index

Wednesday, June 24, 2015

May New Business Volume Up 1 Percent Year-over-year, Down 13 Percent Month-to-month, Up 10 Percent Year-to-date

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 $903 billion equipment finance sector, showed their overall new business volume for May was $7.1 billion, up 1 percent from new business volume in May 2014. Volume was down 13 percent from $8.2 billion in April. Year to date, cumulative new business volume increased 10 percent compared to 2014.

Receivables over 30 days were 1.1 percent, up from 0.9 percent the previous month and from 1.0 percent the same period in 2014. Charge-offs remained at an all-time low of 0.2 percent for the 15th consecutive month.

Credit approvals totaled 79.2 percent in May, up from 78.7 percent in April. Total headcount for equipment finance companies was up 4.7 percent year over year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for June is 63.0, easing from the May index of 67.5.

ELFA President and CEO William G. Sutton, CAE, said: “New business volume continues to hold its own in the equipment finance sector, despite the modest April to May decline. Although members report strong activity in certain markets, some business owners continue to take a wait-and-see attitude before investing in new plant and equipment, as the Fed considers when to tighten monetary policy, which will lead to higher interest rates. Nevertheless, a double-digit increase in cumulative new business volume for the year is indicative of the sector’s strength. Portfolios continue to perform well and member companies appear to be in a hiring mode, as headcount is up for the month.”

Andrew Bender, CEO, GSG Financial LLC, said, “MLFI-25 new business volume suggests continued growth for the equipment leasing and finance industry. Charge offs and delinquency remain at historic lows and hiring in 2015 has been robust. Industry players are bullish and competition will remain tough, but these are all positive indicators as end users plan for year-end capital acquisitions. Things could get interesting if the Fed impacts buying behavior across rate-sensitive sectors or if Congress extends bonus depreciation or enacts other tax reform. With an eye on global economic disruptions, I am optimistic, but cautious.”

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 at www.elfaonline.org/Data/MLFI/

MLFI-25 Methodology

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.

About ELFA

The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $903 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 580 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. 

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