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 July was $7.0 billion, down 17 percent year-over-year from new business volume in July 2015. Volume was down 30 percent month-to-month after a spike to $10.0 billion in June. Year to date, cumulative new business volume decreased 8 percent compared to 2015.
Receivables over 30 days were 1.3 percent, a decrease from the previous month and up from 1.01 percent in the same period in 2015. Charge-offs were 0.38 percent, down from 0.65 percent the previous month.
Credit approvals totaled 75.9 percent in July, down from 78.1 percent in June. Total headcount for equipment finance companies was up 3.3 percent year over year.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for August is 54.8, an increase from the July index of 52.5.
ELFA President and CEO Ralph Petta said, "July's new business volume to begin the third quarter continues the rollercoaster ride that is the equipment finance sector in 2016. Positive fundamentals in the U.S. economy, which include a recent strong jobs report, lower unemployment and a bullish equities market, are offset by sluggish overall growth in the U.S. economy and stagnant capex spending by businesses both large and small. As the presidential campaign moves into higher gear, it appears business owners continue their wait-and-see attitude toward investment in and expansion of their business operations. Credit quality also follows this up-and-down pattern, but continues to show some deterioration when compared to the same period 12 months ago."
Aylin Cankardes, Founder and President, Rockwell Financial Group, said, "The industry in general has experienced a more reserved approach to capex spending by customers during times of uncertainty as a result of unpredictable global market trends and political landscape. Some customers are still on the sidelines and delaying decisions in regard to equipment acquisition, which is consistent with ELFA's data on lower business volume. Despite slowing trends within certain market segments, Rockwell Financial Group continues to see positive year-over-year growth in several of our business lines. We saw strong demand in the renewables and project finance sector through the year due to lower panel pricing and the advantage of tax credits. There are also solid signs by our manufacturing and industrial customers to add new assets for expansion, which should provide good news for the fourth quarter. It's encouraging that while adapting to challenging market flows and economic news the U.S. equipment leasing and finance industry continues to improve monitoring of credit risk and disciplined portfolio management to drive down delinquencies and charge offs."
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MLFI-25 New Business Volume
(Year Over Year Comparison)
Aging of Receivables Over 30 Days:
Average Losses (Charge-offs) as a % of net receivables (Year Over Year Comparison)
Credit Approval Ratios As % of all Decisions Submitted (Year Over Year Comparison)
Total Number of Employees (Year Over Year Comparison)