WASHINGTON, D.C. - 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 their overall new business volume for May was $9.4 billion, up 16 percent year-over-year from new business volume in May 2021. Volume was down 10 percent from $10.5 billion in May. Year-to-date, cumulative new business volume was up nearly 8 percent compared to 2021.
Receivables over 30 days were 1.6 percent, down from 2.1 percent the previous month and down from 1.9 percent in the same period in 2021. Charge-offs were 0.12 percent, up from 0.05 percent the previous month and down from 0.30 percent in the year-earlier period.
Credit approvals totaled 76.8 percent, down from 77.4 percent in April. Total headcount for equipment finance companies was down 3.0 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in June is 50.9, an increase from 49.6 in May.
ELFA President and CEO Ralph Petta said, “May activity for MLFI-25 equipment finance company participants shows strong origination volume and very stable credit quality metrics. The economy continues to provide jobs and corporate America, in general, reports strong balance sheets—all in the face of a waning health pandemic. Offsetting this good news is high inflation, creating havoc for many consumers, and continued supply chain disruptions and higher interest rates, which are squeezing much of the business sector. As a result, many equipment finance providers approach the summer months with guarded optimism.”
Scott Dienes, Senior Vice President & Head of Equipment Finance and Leasing, Associated Bank, said, “The sustained rising interest rate environment coupled with pandemic overhang and extreme supply chain bottlenecks have pushed for a greater need in the equipment financing industry. With this in mind, the market has continued a year-over-year increase in new business volume which leads us to continue to be cautiously optimistic going forward with nearly half the year complete.”
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.
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.