The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $628 billion equipment finance sector, showed overall new business volume for January was $5.1 billion, up 21 percent from volume of $4.2 billion in the same period in 2011. Volume was down 53 percent from December, following the typical end-of-quarter, end-of-year spike in new business activity.
Credit quality metrics continued to improve. Receivables over 30 days decreased to 1.9 percent in January from 2.1 percent in December. Charge-offs decreased to 0.5 percent from 0.7 percent in December.
Following an unusually high credit approval ratio in December, credit approvals returned to a more typical level of 77 percent in January. More than 71 percent of participating organizations reported submitting more transactions for approval during January, down from 77 percent in December.
Finally, total headcount for equipment finance companies in January decreased 3.0 percent from December and was down 3.0 percent year over year. Supplemental data show that the construction and trucking industries continued to lead the underperforming sectors.
Separately, ELFA's Monthly Confidence Index (MCI-EFI) for February is 59.6, a slight increase from the January index of 59.0, indicating industry participants’ optimism is steady despite a cautious outlook about the global economic situation in the coming months. For more detailed information on the MCI-EFI visit www.LeaseFoundation.org
ELFA president and CEO William G. Sutton, CAE, said, “January’s increase in new business volume returned to a more typical growth pattern following a very busy end-of-year for many leasing and finance companies. The continued strengthening in financing volume and trend toward healthier portfolios provide clear evidence that the equipment finance marketplace is in the midst of regaining some of the momentum lost during the Great Recession.”
The MLFI-25 is the only 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/Research/MLFI/