Equipment Leasing and Finance Association’s survey of economic activity: Monthly Leasing and Finance Index
October new business volume up 6 percent year-over-year, 11 percent month-to-month and nearly 6 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 October was $11.3 billion, up 6 percent year-over-year from new business volume in October 2021. Volume was up 11 percent from $10.2 billion in September. Year-to-date, cumulative new business volume was up nearly 6 percent compared to 2021.
Receivables over 30 days were 1.7 percent, up from 1.5 percent from the previous month and unchanged from the same period in 2021. Charge-offs were 0.18 percent, up from 0.17 percent the previous month and up from 0.16 percent in the year-earlier period.
Credit approvals totaled 77.0 percent, down from 77.3 percent in September. Total headcount for equipment finance companies was down 4.7 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 43.7, a decrease from the October index of 45.
“The equipment finance industry demonstrates its typical resilient nature, producing an increase in October new business volume despite months of interest rate hikes brought on by the Fed’s efforts to control inflation. Despite the spectre of an imminent recession — as many economists predict — equipment finance organizations continue to do what they do best, i.e., help supply the nation’s businesses with productive assets that enable them to survive and thrive,” says Ralph Petta, ELFA president and CEO.
“By now there should be some consensus amongst economists and industry vets alike that the economy slowing down is not only predictable, but intended — and necessary. We see it coming and know it's close. We just won't know what the severity and duration will be until we come out on the other side. Despite the rhetoric from drama-driven sources, it's unlikely that the sky will fall given our modern quantitative tightening policies and practices. Tough, yes, global economic catastrophe, probably not. We see the economic tightening as an opportunity for carriers to get back on track with normal equipment replacement cycles that have been postponed and explore new verticals. Business reorganizations will require lenders to adapt to changing practices and operations. It will not be business as usual for the foreseeable future, so it is our role as lenders and financing consultants to help manage difficult situations," says James Currier, chief revenue officer, Finloc USA Inc.
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.
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.
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