CapEx Finance Index (CFI) for May 2025
Demand rose; financial conditions remained healthy.
“The May CFI survey confirmed that the equipment finance industry had a good start to 2025. Demand for new equipment picked up in the latest data, particularly at captive businesses, and industry-wide financial conditions remained healthy,” says Leigh Lytle, president and CEO at ELFA.
“The May delinquency data was largely unchanged after accounting for an outlier, and losses were stable, both good signs considering the restrictive stance of monetary policy. The slow bite of tariffs may still emerge this summer, and conflict abroad could impact energy prices and supply chains, but the string of solid CFI surveys is yet another clear indication that the equipment finance industry is going to be tough to slow down in 2025.”
New business volumes improved
New business volumes rose by 3.0 percent in May from the previous month to $10.3 billion. The increase was nearly exactly in line with the recent two-year trend. New business volumes for small ticket deals were up 17.8 percent, the fifth consecutive month of double-digit volatility. It was also a nearly complete reversal from the 18.3 percent decline in the prior month.
New volumes grew by 14 percent at captives and 5.0 percent at independents from April to May but declined by 3.0 percent at banks. That contrasts with the recent increase in bank volumes relative to captives and independents. The six-month rolling average of activity at banks as a share of total new volume activity jumped by 7.3 percentage points over the last year. That gain has come at the expense of new deals at captives, where the share of new activity has dropped by a nearly identical 7.3 percentage points.
Employment levels lower
The 12-month change in total employment was down 1.2 percent from May 2024. That’s an eight-tenths improvement from the 2.0 percent decline that was recorded in April. Employment was up at banks and independents and down at captives.
Credit approvals remained elevated
The overall credit approval rate edged down by four-tenths of a percentage point to 77 percent. The May rate is the second highest reading in the last two years; the highest was last month at 77.4 percent. The average approval rate on small ticket items declined by half of a percentage point but also remained near its two-year high.
Financial conditions were largely unchanged
Industry-wide delinquencies rose by more than percentage point, from 1.8 percent to 2.9 percent, from April to May. Adjusting for an outlier showed a more modest rise in 30-day aging receivables of around a tenth of a percentage point to 1.9 percent. Delinquencies for small ticket deals and at independent companies were also impacted. The loss rate was essentially unchanged from April.
“New business activity has been strong for our equipment finance business this year and up significantly from the first five months of 2024 as economic fundamentals that we favor—labor market strength, moderating inflation, easing monetary policy, strong corporate earnings—remain resilient,” says David Drury, senior vice president and head of Commercial Specialty Lending, Fifth Third Bank, National Association. “However, we suspect these fundamentals will deteriorate until a clear path forward for global trade is agreed upon by policymakers and businesses alike and may present headwinds for equipment financing activity in the second half of the year.”
Industry confidence
The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, increased to 58.2 in June, rebounding from tariff pressures after dramatic lows in April and May.
More detail on the data and methodology can be found at www.elfaonline.org/CFI.
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