June New Business Volume Down 7 Percent Year-over-year, Up 18 Percent Month-to-Month, Up 4 Percent Year-to-date
Washington, DC, July 25, 2018—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 June was $9.1 billion, down 7 percent year-over-year from new business volume in June 2017. Volume was up 18 percent month-to-month from $7.7 billion in May. Year to date, cumulative new business volume was up 4 percent compared to 2017.
Receivables over 30 days were 1.40 percent, down from 1.60 percent the previous month and up from 1.30 percent the same period in 2017. Charge-offs were 0.33 percent, up from 0.31 percent the previous month, and down from 0.38 percent in the year-earlier period.
Credit approvals totaled 75.8 percent in June, down from 76.8 percent in May. Total headcount for equipment finance companies was down 0.2 percent year over year. During 2017, headcount was elevated due to acquisition activity at an MLFI reporting company.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in July is 62.8, easing from the June index of 66.2.
ELFA President and CEO Ralph Petta said, “Most sectors of the equipment finance industry are performing well, as the economy’s underlying fundamentals continue to hold up in the face of slowly rising interest rates. A strong corporate earnings season and continued strength in the labor markets create a positive environment for capex spending. Hopefully, potential disruption in the global supply chain created by frictions with our trading partners does not upend this positive scenario.”
Kris Snow, President, Cisco Capital, said, “The overall equipment financing industry activity has been strong during the first six months of 2018. In the technology sector, customers continue to shift their buying behaviors toward pay-per-use models, cloud-based models and bundled solutions that may include hardware, software and services. As a result, we expect captive finance companies to grow in importance as a strategic underpinning for business and economic growth throughout the remainder of the year.”
About the ELFA’s MLFI-25
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 released globally at 8 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 MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants, is available at www.elfaonline.org/Data/MLFI/
MLFI-25 Methodology
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.
About ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $1 trillion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its 575 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, please visit www.elfaonline.org.
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ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit www.elfaonline.org/Data/ for additional information.
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.
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