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 January was $5.1 billion, up 21 percent from volume of $4.2 billion in the same period in 2011. Volume was down 53 percent from December, following the typical end-of-quarter, end-of-year spike in new business activity.
Credit quality metrics continued to improve. Receivables over 30 days decreased to 1.9 percent in January from 2.1 percent in December. Charge-offs decreased to 0.5 percent from 0.7 percent in December.
Following an unusually high credit approval ratio in December, credit approvals returned to a more typical level of 77 percent in January. More than 71 percent of participating organizations reported submitting more transactions for approval during January, down from 77 percent in December.
Finally, total headcount for equipment finance companies in January decreased 3 percent from December and was down 3 percent year over year. Supplemental data show that the construction and trucking industries continued to lead the under-performing sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for February is 59.6, a slight increase from the January index of 59.0, indicating industry participants' optimism is steady despite a cautious outlook about the global economic situation in the coming months.
"January's increase in new business volume returned to a more typical growth pattern following a very busy end-of-year for many leasing and finance companies," says ELFA President and CEO William G. Sutton, CAE. "The continued strengthening in financing volume and trend toward healthier portfolios provide clear evidence that the equipment finance marketplace is in the midst of regaining some of the momentum lost during the Great Recession."
"The construction sector is recovering from a deep recession beginning with increases in the rental fleet portion of the industry," says Daniel McCabe, senior vice president, sales and marketing, John Deere Financial. "Adequate liquidity and favorable interest rates will support further expansion of the business."