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 $1 trillion equipment finance sector, showed their overall new business volume for May was $7.7 billion, up 13% year-over-year from new business volume in May 2016.
Volume was down 3% month-to-month from $7.9 billion in April. Year to date, cumulative new business volume was up 7% compared to 2016.
Receivables over 30 days were 1.40%, up from 1.30% the previous month and up from 1.30% in the same period in 2016. Charge-offs were 0.47%, up from 0.38% the previous month, and up from 0.33% in the year-earlier period.
Credit approvals totaled 77% in May, up from 75.9% in April. Total headcount for equipment finance companies was up 15.4% year over year, largely attributable to continued acquisition activity at an MLFI reporting company.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for June is 63.5, steady with the May index of 63.2.
ELFA President and CEO Ralph Petta said, “Origination volume for the month of May continues strong second quarter performance for the equipment finance industry. Although certain verticals and industry sectors are performing better than others, overall demand for capital equipment continues the positive momentum begun in the first few months of the year. At the same time, credit quality remains in acceptable ranges. While the data provide a rear-view mirror glimpse of industry health, more telling will be the impact of rising interest rates, warmer summertime weather and whether policy makers in Washington succeed in making progress on important legislative matters that benefit the business community.”
“The current business environment is perplexing. While the U.S. economy is experiencing the third longest expansion in history, there have not been any sustained pockets of robust growth. Confidence levels are still very encouraging, as businesses continue to invest and finance equipment and related services at stronger levels than in 2016,” said Adam D. Warner, President of Key Equipment Finance. “It is critically important to watch all economic indicators and the Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor to choose which verticals provide the best opportunity for growth with appropriate levels of risk. With rising interest rates forecast for the remainder of the year, we expect some margin compression relief with minimal impact on new financing activity.”