The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $628 billion equipment finance sector, showed overall new business volume for December was $10.8 billion, up 20 percent from volume of $9.0 billion in the same period in 2010. Volume was up 74 percent from the previous month. Cumulative new business volume for 2011 rose 25 percent over 2010.
Credit quality metrics remained relatively steady. Receivables over 30 days rose slightly to 2.1 percent in December from 2.0 percent in November. Charge-offs were unchanged at 0.7 percent for the third consecutive month.
Credit standards eased as the number of lease applications approved increased dramatically to 79.3 percent from 76.2 percent the previous month. 70.8 percent of participating organizations reported submitting more transactions for approval during December, up from 65.5 percent the previous month.
Finally, total headcount for equipment finance companies in December was unchanged month to month and down 1.0 percent year over year. Supplemental data show that the construction and trucking industries again led the underperforming sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for January is 59.0, an increase from the December index of 57.2, indicating improved optimism about business activity amid continuing concerns about the global economic situation. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org.
"The dramatic surge in December new business volume is the result of several factors, which when combined, form an almost 'perfect storm' of unusually strong business activity," says ELFA President and CEO William G. Sutton, CAE. "First, demand for the lease/finance product increased as businesses replenished their capital equipment stock. Related to this are reports from many ELFA member organizations of a highly competitive pricing environment. In addition, the pick-up in new business volume seems to support recent bank data that suggest that lenders are making more credit available to their commercial and consumer borrowers. Add to the mix a frenetic pace for end-of-quarter, end-of-year closings and the result is a very robust monthly performance."
"Confidence is on the rise, and businesses are beginning to replace aging equipment since they have been holding back over the previous few years," says David Schaefer, president, Orion First Financial, LLC. "We remain optimistic that equipment replacement will continue, but we aren't certain we have entered an expansion phase across all industries. The equipment leasing and finance industry continues to have access to capital and with rates low, we are well positioned to serve Main Street businesses as demand grows."