ELFA Survey of Economic Activity: Monthly Leasing and Finance Index
Posted: June 2, 2023 | Tradewinds
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 April was $9.7 billion, down 8 percent year-over-year from new business volume in April 2022. Volume was down 7 percent from $10.4 billion in March. Year-to-date, cumulative new business volume was up 0.7 percent compared to 2022.
Receivables over 30 days were 1.8 percent, down from 1.9 percent the previous month and down from 2.1 percent in the same period in 2022. Charge-offs were 0.33 percent, up from 0.32 percent the previous month and up from 0.05 percent in the year-earlier period.
Credit approvals totaled 77.3 percent, up from 75.3 percent in March. Total headcount for equipment finance companies was down 1.8 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in May is 40.6, a decrease from the April index of 47.0.
ELFA President and CEO Ralph Petta said, “ April data revealed some softness in new business volume reported by MLFI respondents. It is not clear whether increased borrowing rates are constraining liquidity or if this decrease in originations is merely a blip in an otherwise healthy marketplace. Separately, a Foundation survey indicates that a growing segment of business heads is somewhat pessimistic about the short-term outlook for the economy, in general, and the equipment finance industry, specifically. We will be monitoring these and other economic data closely to provide useful insights to ELFA members as they navigate a choppy economy.”
Jeffrey LaLima, President, Financial Partners Group, said, “We all continue to navigate the ebbs and flows of a challenging economy. While that impact has been felt across all industries with unique circumstances, collectively, equipment finance appears to be well positioned. Companies and consumers remain resilient and are more mindful of the role financing plays as part of strategic long-term capital decisions. We’re coming from a period where access to capital was high, and the cost was the lowest we’ve seen in decades. Now, we’re seeing more thoughtful conversations and informed decisions—heightening the importance of relationships and experienced people to help navigate it all.”
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.
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $1 trillion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its 580 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. ELFA has been equipping business for success for more than 60 years. For more information, please visit www.elfaonline.org.
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