January 2020 Equipment Financing New Business was Up 28% from a Year Ago
Feb. 27, 2020 — The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index showed that overall new business volume for January was $9.2 billion, up 28% year-over-year from new business volume in January 2019.
The index reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector.
Although volume was up 28% compared to last January, the volume was down 29% month-to-month from $12.9 billion in December, 2019, following the typical end-of-quarter, end-of-year spike.
Receivables over 30 days were 2.00 %, down from 2.20% the previous month and unchanged from the same period in 2019.
Charge-offs were 0.47%, down from 0.51% the previous month, and up from 0.35% a year earlier.
Credit approvals totaled 76.3%, down from 77.1% in December. Total headcount for equipment finance companies was down 3.0% year over year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index in February is 58.7, down slightly from the January index of 59.9.
ELFA President and CEO Ralph Petta said, “The year starts off with a bang as January new business volume increases dramatically on a year-over-year basis. Underlying fundamentals in the U.S. economy — strong job growth, low inflation, low interest rates, continuation of a bull equities market and solid business confidence — all add up to a growing demand for productive equipment necessary to keep businesses expanding and profitable.”
Stephen Hamilton, Chairman and CEO, CSI Leasing, Inc., said, “2019 was another record year for CSI, with lease originations up 15 percent worldwide to over $1.4 billion, led by a strong increase of 23% in our U.S. business. Back office efficiencies and use of technology have allowed this to occur with no increase in our U.S. leasing headcount. Our traditional focus on successful middle-market to large corporate customers has resulted in continued strong credit performance with minimal write-offs. Optimism is high for 2020, with a solid start in January and a record pipeline of first quarter business on tap, although we expect uncertainty regarding the impacts of the coronavirus and the November elections could slow customer decision making in coming months.”
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 at www.elfaonline.org/Data/MLFI/.