Year to date, cumulative new business volume was up 5 percent compared to 2016, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25).
The index, 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 November was $7.5 billion, up 17 percent year-over-year from new business volume in November 2016. Volume was down 11 percent month-to-month from $8.4 billion in October.
Receivables over 30 days were 1.50 percent, up from 1.40 percent the previous month and up from 1.30 percent the same period in 2016. Charge-offs were 0.42 percent, up from 0.41 percent the previous month, and up from 0.40 percent in the year-earlier period.
Credit approvals totaled 73.6 percent in November, down from 74.6 percent in October. Total headcount for equipment finance companies was up 17.9 percent year over year, largely attributable to continued acquisition activity at an MLFI reporting company.
ELFA President and CEO Ralph Petta said, “As we near the end of the fourth quarter, new business volume for the month continues the moderate growth trend in the equipment finance industry that began a few years ago. Despite a slight deterioration in credit quality, the industry appears poised to end the year on a high note. Time will tell if conditions favorable to business investment will remain in place in the coming year. We think so. Members typically look forward to a strong closing month and December looks to be no exception.”
Gary W. LoMonaco, Vice President-Treasurer, Forsythe/McArthur Associates, Inc., a Sirius Company, said, “2017 has been a very strong year for investment in capital equipment. The year-over-year originations numbers reflect that strength. Although many forecasts for 2018 expect somewhat lower capital investment levels, the equipment leasing and finance industry is optimistic for next year, as rising interest rates have historically driven companies toward financing acquisitions rather than paying cash. There is also excitement around fresh financial offerings such as consumption-based and managed services financing.”
December Equipment Leasing & Finance Foundation’s Monthly Confidence Index is 69.4, up from 67.0 in November
- When asked to assess their business conditions over the next four months, 32.1% of executives responding said they believe business conditions will improve over the next four months, relatively unchanged from 32.4% in November. 67.9% of respondents believe business conditions will remain the same over the next four months, also relatively unchanged from 67.7% the previous month. None believe business conditions will worsen, also unchanged from the previous month.
- 46.4% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 35.3% in November. 53.6% believe demand will “remain the same” during the same four-month time period, down from 64.7% the previous month. None believe demand will decline, unchanged from November.
- 25.0% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 29.4% in November. 67.9% of executives indicate they expect the “same” access to capital to fund business, relatively unchanged from 67.7% last month. 7.1% expect “less” access to capital, up from none last month.
- When asked, 53.6% of the executives report they expect to hire more employees over the next four months, an increase from 35.5% in November. 46.4% expect no change in headcount over the next four months, a decrease from 61.8% last month. None expect to hire fewer employees, a decrease from 2.9% in November.
- 10.7% of the leadership evaluate the current U.S. economy as “excellent,” down from 17.7% last month. 89.3% of the leadership evaluate the current U.S. economy as “fair,” an increase from 82.4% in November. None evaluate it as “poor,” unchanged from last month.
- 42.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 32.5% in November. 57.1% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 64.7% the previous month. None believe economic conditions in the U.S. will worsen over the next six months, a decrease from 2.9% who believed so in November.
- In December, 57.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 52.9% in November. 42.9% believe there will be “no change” in business development spending, a decrease from 47.1% the previous month. None believe there will be a decrease in spending, unchanged from last month.