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 $725 billion equipment finance sector, showed their overall new business volume for May was $7.5 billion, up 21 percent compared to volume in May 2012. Month-over-month, new business volume was unchanged from April. Year to date, cumulative new business volume was up 11 percent compared to 2012.
Receivables over 30 days were at 1.6 percent in May, matching an historic low, and down from the previous three months at 2.0 percent. Delinquencies declined from 2.7 percent in the same period in 2012. Charge-offs were unchanged for the past three months at the all-time low of 0.3 percent.
Credit approvals totaled 78.8 percent in May, up from 77.2 percent in April. Sixty-three percent of participating organizations reported submitting more transactions for approval during May, down from 72 percent the previous month.
Finally, total headcount for equipment finance companies was up one percent from the previous month, and up one percent year over year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for June is 57.3, an increase from the May index of 56.7.
ELFA President and CEO William G. Sutton, CAE, said: “May MLFI-25 data suggest an equipment finance sector on the verge of a breakout performance. While recent key indicators show an overall improvement in lending to the small business sector, the May numbers provide concrete evidence of growing demand for productive assets by a cross section of the business community. At the same time, historic lows in delinquencies and charge-offs mean American businesses are better able to meet their financial obligations, creating a favorable environment for additional capital investment and job creation. We hope that these trends will continue into the summer.”
Robert Rinaldi, Senior Vice President, CSI Leasing, Inc., said, “The fact that all of the metrics are going in the right direction is really encouraging. Many lessors have seen these ups in new business volume (NBV) followed by subsequent down months, evidenced in the ’saw-tooth’ pattern of the NBV chart. But, and this is a good news ’but,’ if you run a six-month rolling average on the NBV data over the past six years to smooth out the ’saw-tooth,’ a clearer picture of definitive growth appears.”
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 below and also at http://www.elfaonline.org/Research/MLFI/
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.