New business volume down for equipment finance and leasing in August
Equipment Leasing and Finance Association’s monthly leasing and finance index shows originations down 10 percent year over year, improved credit performance.
The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), a survey of economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, reports that in August:
- New business volume (NBV) was $9.2 billion, down 10 percent from August 2023.
- Month over month, NBV was down 17 percent from $11.1 billion in July 2024.
- Year to date, cumulative NBV was up 3.5 percent compared to 2023.
Additional findings include:
- Receivables over 30 days were 2.2 percent, down from 2.5 percent the previous month and down from 2.3 percent in the same period in 2023.
- Charge-offs were 0.4 percent, down from 0.5 percent the previous month, and up from 0.3 percent year over year.
- Credit approvals totaled 76 percent, unchanged from July.
- Total headcount for equipment finance companies was up 1.2 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index in September is 61.9, up from the August index of 58.4, and the highest level in more than two years.
“The Fed’s decision to begin lowering interest rates will support demand for equipment, even if some businesses wait for rates to fall further before investing. That wait-and-see approach showed up in our August MLFI as new business volumes declined. However, ELFA members expect acquisitions to pick up once we‘re past the election and interest rates fall a bit further. That sentiment was also reflected in our Foundation’s recent Monthly Confidence Index, which showed that equipment finance executives are very optimistic about their organizations’ prospects over the next four months. Finally, credit conditions remain healthy, which will allow lessors and financiers to service new demand when it shows up later this year,” says Leigh Lytle, ELFA president and CEO.
“It appears there is still a slight slowdown in the equipment finance industry, which was heavily weighted in the decrease in origination activity at banks, which led to a dip in new business volume. However, it's reassuring to hear that portfolio quality is remaining stable, with improvements in receivables and a reduction in losses. What was not baked into these numbers was the Fed rate drop this month. This will help stimulate fourth quarter growth for both independent lessors and banks. The anticipation of further rate reductions may indeed boost demand, encouraging businesses to invest in capital expenditures. It's definitely a pivotal time for both independent lessors and banks as we navigate these changes, but I think we are going to start trending in the right direction,” says Marci Slagle, CLFP, president, BankFinancial Equipment Finance.
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. 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 MLFI-25 consists of two years of business activity data from 25 participating companies. For more details, including methodology and participants, visit www.elfaonline.org/knowledge-hub/mlfi.
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