January Equipment Leasing and Financing Volume was Up 2%
March 3, 2022 - 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 January was $8.3 billion, up 2% year-over-year from new business volume in January 2021. Volume was down 30% month-to-month from $11.8 billion in December following the typical end-of-quarter, end-of-year spike in new business activity.
Receivables over 30 days were 1.8%, down from 2.0% the previous month and down from 2.2% in the same period in 2021. Charge-offs were 0.17%, down from 0.25% the previous month and down from 0.47% in the year-earlier period.
Credit approvals totaled 78.4%, down from 78.6% in December. Total headcount for equipment finance companies was down 11% year-over-year, a decrease due to significant downsizing at an MLFI reporting company.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in February is 61.8, a decrease from 63.9 in January.
ELFA President and CEO Ralph Petta said, “Despite persistent supply chain disruptions in several collateral categories and nagging inflation, the equipment finance industry picks up in January where it left off last year: new business volume is robust and portfolios continue to perform. The impact of impending higher interest rates on industry performance in the coming weeks and months bears watching, however.”
Eric Gross, Chief Operating Officer, Dext Capital, said, “As we end February and look forward, we have conflicting pressures on the market. The pandemic subsiding and the prospect of a return to some sense of normalcy, as well as a robust backlog, raises optimism. These positives are countered with the ongoing supply chain disruptions, inflation, a rising interest rate environment and international tensions. With that said, overall, we think the headwinds are manageable and are bullish on market growth through 2022.”
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/.