Equipment Leasing and Finance Association Survey of Economic Activity: Monthly Leasing and Finance Index
December new business volume up two percent year-over-year, 65 percent month-over-month, and five percent at year-end.
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 $900 billion equipment finance sector, showed its overall new business volume for December was $12.9 billion, up two percent year-over-year from new business volume in December 2018. Volume was up 65 percent month-to-month from $7.8 billion in November in a typical end-of-year spike. Cumulative new business volume for 2019 was up five percent from 2018.
Receivables over 30 days were 2.20 percent, up from 1.80 percent the previous month and up from 1.70 percent the same period in 2018. Charge-offs were 0.51 percent, up from 0.43 percent the previous month, and down from 0.55 percent in the year-earlier period.
Credit approvals totaled 77.1 percent, up from 75.7 percent in November. Total headcount for equipment finance companies was down 3.3 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in January is 59.9, an increase from the December index of 56.2.
“Equipment finance companies ended the year with steady 5 percent cumulative new business growth. However, some ELFA member organizations are seeing slightly elevated levels of stress in their portfolios, corroborating evidence that soft patches can be found in some sectors of the U.S. economy. Whether recent relaxation of nagging trade tensions between the U.S. and several of its trading partners improves conditions in the industrial and ag sectors of the U.S. economy remains to be seen as we move deeper into the new year.” ELFA president and CEO Ralph Petta
“We have done well for the past 12 months. While our new business volume has increased a modest 6 percent, our spreads have shown a nice improvement and the quality of our business is quite satisfactory. There has been a slight uptick in our credit losses, yet they continue to be substantially below ‘normal’ levels. We are optimistic about calendar year 2020, foreseeing modest growth of quality and profitable volume as we work hard to help our customers be even more successful.” Tony Golobic, chairman and chief executive officer, GreatAmerica Financial Services
About ELFA’s MLFI-25
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 atwww.elfaonline.org/Data/MLFI/.
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.
ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit www.elfaonline.org/Data/ for additional information.
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