Equipment Leasing and Finance Association

Equipment Finance Index Down 10% in February But 15% Up over 12 Months

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 $827 billion equipment finance sector, showed overall new business volume for February was $5.4 billion, up 15 percent from February 2013. New business volume was down 10 percent from January. Year to date, cumulative new business volume increased 8 percent compared to 2013.

Receivables over 30 days were unchanged from the previous month at 1.8 percent. Delinquencies were down from 2.0 percent during the same period in 2013. Charge-offs were up slightly at 0.4 percent from the previous three months’ all-time low of 0.3 percent.

Credit approvals totaled 75.3 percent in February, a decrease from 76.9 percent the previous month. Fifty-three percent of participating organizations reported submitting more transactions for approval during February, a decrease from 54 percent during January.

Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for March is 65.1, the highest index in two years and an increase from the February index of 63.3.

“This month’s increase in financing activity reflects a strengthening economy evidenced by a resilient housing market trying to return to pre-recession levels, moderate GDP growth and an improving jobs picture," said ELFA President and CEO William G. Sutton, CAE. "It is too early to tell whether the positive economic momentum created in the first two months of the year will be sustainable for the balance of 2014, particularly as Fed policy begins to push up long-term interest rates and geopolitical headwinds emerge anew in Eastern Europe. Credit markets continue to perform well.”    

“I think the positive new business volume trend for the month, in light of the adverse weather across much of the country, combined with the upward tick in industry employment, signals the strength of our industry," said Gary Kempinski, GM, GE Capital Transportation Finance’s Navistar Capital program. "The charge-offs indicated by the MLFI-25 survey are similar to last year’s pattern. When paired with what look like slightly tighter underwriting standards on approvals, I think the industry is acting responsibly to ensure credit stability. Taken together with what we hear from our customers about how well they believe their businesses are performing, I think the MLFI survey indicates equipment customers and financers are feeling pretty good this month.”

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/

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