Survey of Economic Activity: January new business volume up by 16 percent year-over-year in US
Washington--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 January was $5.9 billion, up 16 percent from volume of $5.1 billion in the same period in 2012. Volume was down 49 percent from December, following the typical end-of-quarter, end-of-year spike in new business activity.
Receivables over 30 days increased to 1.8 percent in January after hitting their lowest level in the last two years in December at 1.6 percent. They were down from 1.9 percent in the same period in 2012. Charge-offs were at an all-time low of 0.3 percent, down from 0.6 percent the previous month.
Credit approvals totaled 78.3 percent in January, down 0.3 % from December. Finally, total headcount for equipment finance companies was up 0.7 percent from the previous month, and increased 0.6 percent year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for February is 58.7, 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.
ELFA President and CEO William G. Sutton, CAE, said: “The year begins where 2012 left off—on a positive note—as new business volume continues to trend in a positive direction. 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. This good news belies an overhang of continued uncertainty that lingers in the marketplace, as policy makers in Washington continue to struggle with fiscal matters, which only serves as a damper to economic growth.”
Irv Rothman, President & CEO, HP Financial Services, located in Berkeley Heights, NJ, said, “We remain optimistic for industry growth as enterprise and government entities increasingly utilize leasing and financing offers to help keep pace with technology change. With rapidly evolving business and IT demands, we continue to see interest from customers for the flexibility leasing, financing and lifecycle asset management provides.”
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 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.
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $725 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 more than 575 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. ELFA has been equipping business for success for more than 50 years.