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 March was $8.2 billion, down 10 percent year-over-year from new business volume in March 2018. Volume was up 39 percent month-to-month from $5.9 billion in February. Year to date, cumulative new business volume was down 10 percent compared to 2018.
Receivables over 30 days were 1.90 percent, up from 1.80 the previous month and up from 1.70 percent the same period in 2018. Charge-offs were 0.37 percent, up from 0.35 percent the previous month, and down from 0.51 percent in the year-earlier period.
Credit approvals totaled 75.3 percent, down from 76.0 percent from February. Total headcount for equipment finance companies was up 0.4 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in April is 58.3, down from the March index of 60.4.
“First quarter new business volume got off to a slow start, relative to Q1 last year," says Ralph Petta, president and CEO of ELFA. "This was not unexpected given analysts’ expectations that equipment and software capex in 2019 could not realistically expect to keep pace with last year’s strong showing. The overall U.S. economy continues to perform reasonably well: unemployment is low; interest rates are favorable, with the Fed deciding to hold off on additional increases for a while; and the broader equity markets are stable. Credit markets appear healthy. Headwinds to this benign scenario include a softening in global economies and continued international trade frictions, particularly with China and Europe.”
“Following a year of growth in 2018, the equipment finance industry experienced two consecutive months of year-over-year declines," adds Alan Sikora, CEO of First American Equipment Finance and a member of the ELFA Board of Directors, said, . Time will tell whether this decrease is simply a hangover from December stock market volatility or an early sign of weakness in the U.S. economy. The U.S. equipment finance industry is massive and strong—no single company commands significant market share. As a result, not all companies are experiencing declines. First American Equipment Finance continues to grow, and we remain optimistic about the remainder of 2019.”
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/Data/MLFI/.