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 May declined by 41 percent when compared to the same period in 2008. Month-to-month new business volume actually increased 2.4 percent from April to May, from $4.1 billion to $4.2 billion.
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 a financial indicator that complements other relevant economic indices, including the monthly durable goods report prepared 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. Together with the MLFI-25 these reports provide a complete picture of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The MLFI-25 reported receivables over 30 days increased to 4.7 percent as compared to 4.0 percent in April and 3.2 percent during the prior-year period. Charge-offs decreased to 1.74 percent from 1.79 percent in the prior month. Credit approvals increased to 66.3 percent from 59.9 percent in April. Seventy-seven percent of participant companies reported that fewer transactions were submitted for approval during the month, due to tightening underwriting standards and lower demand. Total headcount for equipment finance companies showed a decrease of 0.9 percent in May. Full MLFI-25 results including methodology, charts and participants are available at:
"For the most part, customers are deferring or lowering capex acquisitions but the demand side appears reasonably strong in the upper end of the market as customers who traditionally paid cash begin to evaluate using equipment finance and leasing products to acquire equipment," said Richard J. Remiker, Senior Vice President, Chief Administrative Officer of RBS Asset Finance, Inc. RBS Asset Finance is an MLFI participant.
"New investment in capital goods by businesses continues at a tepid pace as 91 percent of MLFI participants report a decline in new business volume," said ELFA President Kenneth E. Bentsen, Jr. "Further the vast majority report continued decline in customer demand along with continued tightening of underwriting standards and credit availability," said Bentsen.
Separately, confidence in the equipment finance market moved slightly higher in June from May, with a score of 51.8 compared to 49.2, according to a monthly confidence index released last week by the Equipment Leasing & Finance Foundation. Introduced in May 2009, the index reports a qualitative assessment of the prevailing business conditions and expectations for the future as reported by executives from the $650 billion equipment finance sector. Survey results are posted on the Foundation website,
About the ELFA's MLFI-25
The MLFI index is released globally at 9:00 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 ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support 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 measures 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 and current business conditions nationally.
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
- Dell Financial Services
- Fifth Third Bank
- First American Equipment Finance
- Hitachi Credit America
- HP Financial Services
- John Deere Credit Corporation
- Key Equipment Finance
- Marlin Leasing Corporation
- National City Commercial Corp.
- RBS Asset Finance
- Regions Equipment Finance
- Siemens Financial Services
- Susquehanna Commercial Finance, Inc.
- US Bancorp
- Tygris Vendor Finance
- Verizon Capital Corp
- Volvo Financial Services
- Wells Fargo Equipment Finance