The Equipment Leasing and Finance Association's (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $650 billion equipment finance sector, showed overall new business volume for July increased 17.2 percent when compared to the same period 2007. Cumulative year-to date new business volumes show an increase of 4.8 percent compared to 2007.
The MLFI-25 is the only index that reflects levels of equipment financed in the U.S. economy. The MLFI-25 complements other relevant economic indices, including the monthly durable goods report produced by the U.S. Department of Commerce, which reflects new orders for manufactured durable goods and the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Along with the MLFI-25 these reports provide a complete picture that describes the use of productive assets in the U.S. economy: equipment produced, acquired and financed.
According to the July data, originations month-to-month declined by 15 percent to $6.8 billion. Respondents' portfolio performance was positive: receivables, a measure of non-delinquent accounts, in the less-than-30 day category were 96.9 percent in July, down from the prior month by 0.2 percent. However, charge-offs showed improvement, at 0.87 percent, a slight decline from the prior month, but still high compared to year-over-year data.
Credit standards appear to have tightened; with credit approval ratios (74.1 percent) decreased 2.3 percent when compared to the prior month (76.4 percent). Total headcount for equipment finance companies has been relatively stable since February 2008 showing slight increase of 0.1 percent compared to the previous month.
"The findings of this study are in line with our experience with respect to receivables and charge-offs. We are seeing continued program opportunities as vendor partners focus on their core manufacturing competencies. Our customer loyalty remains high as financing continues to represent significant value add to manufacturers' end-user relationships,"
said Kris Snow, President and Co-Head, Global Vendor Finance, CIT, whose company participates in the monthly survey.
"Business investment in capital goods continues even in light of the credit crunch and weakness in the overall economy. It is a testament to business confidence and export demand," said Kenneth E. Bentsen, Jr., ELFA President.
ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information which supports strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment; five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 provides metrics reflecting monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector including small ticket, middle market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector, which contributes to the representation of current business conditions nationally.
Results of each MLFI-25 are posted on the ELFA website and in ELT, the Magazine of Equipment Leasing and Finance. To access ELFA's comprehensive industry information, please visit http://www.elfaonline.org/ind/research/
Participants in the ELFA MLFI-25:
- ADP Credit Corporation
- Bank of America
- Bank of the West
- Canon Financial Services
- Caterpillar Financial Services Corporation
- De Lage Landen Financial Services
- Fifth Third Bank
- First American Equipment Finance
- Hitachi Credit America
- HP Financial Services
- Irwin Financial
- John Deere Credit Corporation
- Key Equipment Finance
- Marlin Leasing Corporation
- National City Commercial Corp.
- RBS Asset Finance
- Regions Equipment Finance
- Siemens Financial Services
- US Bancorp
- US Express Leasing
- Verizon Capital Corp
- Volvo Financial Services
- Wells Fargo Equipment Finance