Durable goods orders contract in January
Equipment Leasing & Finance Association CapEx finance index shows demand pulled forward from December 2024 to January 2025.
- FORECAST: Growth in new business volumes suggests durable goods orders will contract by 3.8 percent in January.
- Total new business volume (NBV) rose by $9.3 billion seasonally adjusted, a decline of 17.8 percent from December to January among surveyed ELFA member companies.
- NBV year-to-date contracted by 6.4 percent from 2023 to 2024 on a seasonally adjusted basis, and the year-over-year change declined by 10.6 percent on a non-seasonally adjusted basis.
- Charge-offs (losses) dropped to 0.46 percent, the second decline in as many months.
“The latest Corporate Finance Institute (CFI) release showed that equipment demand was pulled forward from January to December, which caused volumes to underperform last month. Much of the overall decline came from the banking sector, which had a stellar yearend and a soft start to 2025. I expect conditions to normalize going forward, but risks to the outlook linger," says Leigh Lytle, president and CEO at ELFA. “Global economic and political uncertainty remains elevated, which could weigh on equipment demand later this year as businesses decide to pause investment until tensions subside. As both aging receivables and charge-offs showed, the industry is well prepared for an extended period of uncertainty, or whatever else may be thrown its way in 2025.”
New business volume growth dropped
NBV growth experienced its largest one-month drop on record, falling by 17.8 percent from December to January. While the percentage decline was sharp, the dollar amount of new business was only at its lowest since March 2023. New activity at banks and captives both experienced a monthly drop of more than 30 percent, while financing at independents grew by almost 9 percent. The dollar amount of new business was still above its monthly average from January through November of 2024, while new activity at captives declined to its lowest level since January 2017.
Headcounts continue to decline
Employment in the equipment finance industry contracted for the third straight month, with the 12-month change dropping 3.5 percent. Employment at banks and captives continued to decline, while job gains at independents slowed.
Credit approvals jump
The average credit approval rate increased to 75.9 percent in January, up 1.6 percentage points, the largest increase since October 2023. The rates for banks, captives, and independents all rose.
Financial conditions remain healthy
Charge-offs dropped for the second consecutive month to 0.46 percent. The January decline brings the rate to just above levels experienced in the 10 months prior to the November increase. Aging receivables over 30 days ticked up to 2.2 percent but remained low.
"Despite macro-economic and political uncertainty, we anticipate companies will still look for creative financing solutions," says Mitch Rice, CEO of Commercial Capital Company. "They're seeking greater flexibility and simplified, frictionless processes to address their evolving needs. Recognizing this demand, the industry is undergoing a widespread focus on technological enhancement to deliver more efficient and effective solutions and services. We're embracing this shift when it comes to process automation and utilizing artificial intelligence."
Industry confidence
The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, eased to 66.9 in February, as respondents grew slightly more pessimistic about conditions over the next four months.
About ELFA’s CFI
The CapEx Finance Index (CFI), formerly the Monthly Leasing and Finance Index (MLFI-25), is the only near-real-time index that reflects capex, or the volume of commercial equipment financed in the U.S. It is released monthly from Washington, D.C., one day before the U.S. Department of Commerce's durable goods report.
This financial indicator complements reports like the Institute for Supply Management Index, providing a comprehensive view of productive assets in the U.S. economy—equipment produced, acquired and financed.
The CFI consists of two years of business activity data from 25 participating companies. For more details, including methodology and participants, visit www.elfaonline.org/CFI
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