Equipment Leasing and Finance Association’s survey of economic activity monthly leasing and finance index
July new business volume down 2 percent year-over-year and 9 percent month-to-month; up 1.3 percent year-to-date.
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 $9.9 billion, down 2 percent year-over-year from new business volume in July 2022. Volume was down 9 percent from $10.9 billion in June. Year-to-date, cumulative new business volume was up 1.3 percent compared to 2022.
Receivables over 30 days were 2.3 percent, up from 1.8 percent the previous month and up from 1.6 percent in the same period in 2022. Charge-offs were 0.32 percent, down from 0.37 percent the previous month and up from 0.18 percent in the year-earlier period.
Credit approvals totaled 75.3 percent, down from 76.1 percent in June. Total headcount for equipment finance companies was down 2.1 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in August is 50.4, an increase from the July index of 46.4.
“In the current relatively high interest rate environment in which the industry finds itself this summer, new business volume is holding up pretty well for the month of July. However, compared to the same period last year, respondents to the MLFI are reporting some softness. This coincides with expectations by economists that overall investment in equipment and software will slow down in the second half of 2023. Is this the canary in the coal mine indicating a modest recession is around the corner? Only time will tell. But, in the meantime, equipment finance companies will continue doing what they always do—provide necessary capital to businesses seeking to acquire productive assets to run their businesses,” says Ralph Petta, EFLA president and CEO.
“Rising interest rate environments will slow consumer spending. Cheap money notes that begin to expire will be replaced by more expensive money, and I expect new investments will be reduced. These are excellent conditions for companies with expiring portfolios. Proposing a diversified capital structure will provide company flexibility. We have reason to be optimistic because equipment finance remains an attractive solution for borrowers and lenders. It is worth repeating that fair market value leases provide a flexible solution that reduces monthly payment,” reports Craig Ault, chief revenue officer, Honour Capital.
About ELFA’s MLFI-25
The MLFI-25 is the only near-real-time 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/knowledge-hub/mlfi-25-monthly-leasing-and-finance-index.
The MLFI-25 is part of the Knowledge Hub, the source for business intelligence in the equipment finance industry. Visit the hub at www.elfaonline.org/KnowledgeHub.
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