Year-End Leasing and Finance New Business Up 5%
Jan. 30, 2020 – The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index showed overall new business volume for December was $12.9 billion, up 2% year over year from December 2018.
Volume was up 65% month over month, from $7.8 billion in November, in a typical end-of-year spike.
Cumulative new business volume for 2019 was up 5% from 2018. Receivables over 30 days were 2.20%, up from 1.80% the previous month, and up from 1.70% from the same period in 2018.
Charge-offs were 0.51%, up from 0.43% the previous month, and down from 0.55% in the year-earlier period. Credit approvals totaled 77.1%, up from 75.7% in November. Total headcount for equipment finance companies was down 3.3% year-over-year.
ELFA President and CEO Ralph Petta said, “Equipment finance companies ended the year with steady 5% cumulative new business growth. However, some ELFA member organizations are seeing slightly elevated levels of stress in their portfolios, corroborating evidence that soft patches can be found in some sectors of the U.S. economy. Whether recent relaxation of nagging trade tensions between the U.S. and several of its trading partners improves conditions in the industrial and ag sectors of the U.S. economy remains to be seen as we move deeper into the new year.”
Tony Golobic, chairman and CEO of GreatAmerica Financial Services, said, “We have done well for the past 12 months. While our new business volume has increased a modest 6%, our spreads have shown a nice improvement and the quality of our business is quite satisfactory. There has been a slight uptick in our credit losses, yet they continue to be substantially below ‘normal’ levels. We are optimistic about calendar year 2020, foreseeing modest growth of quality and profitable volume as we work hard to help our customers be even more successful.”
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/.