This chart shows a year-over-year comparision of new business volume (in billions).
Photo credit: Equipment Leasing and Finance Association
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 June was $8 billion, up 9.5 percent from volume of $7.3 billion in the same period in 2011. Volume was up 29 percent from the previous month. Year-to-date cumulative new business volume increased 14.5 percent.
Receivables over 30 days were 2.4 percent, down from 2.7 percent in May, and down slightly when compared to the same period in 2011. Charge-offs increased to 0.6 percent in June, up from 0.5 percent the previous month and down by 45.4 percent compared to the same period last year.
Credit approvals increased to 78.7 percent in June from 78.3 percent in May. Sixty-five percent of participating organizations reported submitting more transactions for approval during June, down from 75 percent in May.
Finally, total headcount for equipment finance companies increased slightly from the previous month but declined 2.6 percent year over year. Supplemental data show that trucking and construction led the under-performing sectors followed by small and medium-sized enterprises.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for July is 51.5, up from the June index of 48.5, and reflects continuing concern over external economic factors and regulatory and political uncertainty.
"Despite recent reports of a softening economy, the level of capital investment by U.S. businesses - both large and small - continues to accelerate," said ELFA President and CEO William G. Sutton, CAE. " In fact, the volume of equipment financed in June, as illustrated by the MLFI-25, surpasses that of any single month except for year-end December activity since the beginning of the Great Recession in 2008. We hope that, in spite of the factors adversely affecting economies overseas, our businesses here at home will be able to continue to invest in productive assets."
"The equipment finance industry is currently benefiting from several factors, including increased CapEx financing in many sectors and improved metrics across the credit spectrum," said Rick Remiker, president, Huntington Equipment Finance. "A large part of this positive trend is due to an improving Midwest economy, formerly known as the 'Rust Belt,' and now being referred to as the 'Recovery Belt.' While all of this is good news for the industry, and near-term business trends remain positive, we remain cautious about global economic concerns dampening demand during the second half of the year.”
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 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.