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. 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 3Q10 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 five 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.
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 United States. 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.