Equipment Leasing & Finance: Oct. New Biz Volume Down 8% Year-Over-Year, Up 7% Month-to-Month

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 $10.4 billion, down 8 percent year-over-year from new business volume in October 2022. Volume was up 7 percent from $9.7 billion in September. Year-to-date, cumulative new business volume was up 0.7 percent compared to 2022.

Receivables over 30 days were 2.5 percent, up from 2.3 percent in September and up from 1.7 percent in the same period in 2022. Charge-offs were 0.42 percent, up from 0.36 percent the previous month and up from 0.26 percent in the year-earlier period.

Credit approvals totaled 76 percent, up from 73.6 percent in September. Total headcount for equipment finance companies was down 0.6 percent year-over-year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 42.8, an increase from the October index of 40.1.

ELFA President and CEO Ralph Petta said, “Despite a set of sound metrics in the U.S. economy, MLFI participants report slight increases in both losses and delinquencies. This softness in credit quality is indicative of the challenges experienced by some businesses as they operate in a higher interest rate environment, constrained in some sectors, at least, by reports of a pull-back in bank lending. Origination activity for the year continues to be in acceptable ranges.”

Dennis Bolton, Senior Managing Director, Head of Equipment Finance North America, Gordon Brothers, said, “All metrics continue to reflect the equipment finance industry’s stability and resilience. The trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment and supply chain disruption. Volume declines, delinquencies and charge-off increases are moderate particularly after periods of such artificially low comparable results. All in all, the industry has performed well and displayed its ability to effectively manage relationship, credit and equipment risk. While challenges remain, the industry is well positioned to manage these challenges and support continued equipment investment.”

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.