Overall new business volume in June for the $628 billion equipment finance sector was $8 billion, up 9.5 percent from volume of $7.3 billion in the same period in 2011, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25). Volume was up 29 percent from the previous month. Year-to-date cumulative new business volume increased 14.5 percent.
“Despite recent reports of a softening economy, the level of capital investment by U.S. businesses—both large and small—continues to accelerate,” said William G. Sutton, CAE, president and CEO of ELFA. “In fact, the volume of equipment financed in June, as illustrated by the MLFI-25, surpasses that of any single month except for year-end December activity since the beginning of the Great Recession in 2008. We hope that, in spite of the factors adversely affecting economies overseas, our businesses here at home will be able to continue to invest in productive assets.”
Receivables over 30 days were 2.4 percent, down from 2.7 percent in May, and down slightly when compared to the same period in 2011. Charge-offs increased to 0.6 percent in June, up from 0.5 percent the previous month, and down by 45.4 percent compared to the same period last year.
Credit approvals increased to 78.7 percent in June from 78.3 percent in May. Sixty-five percent of participating organizations reported submitting more transactions for approval during June, down from 75 percent in May.
Finally, total headcount for equipment finance companies increased slightly from the previous month, but declined 2.6 percent year over year. Supplemental data show that trucking and construction led the underperforming sectors, followed by small and medium-sized enterprises.
“The equipment finance industry is currently benefitting from several factors, including increased CapEx financing in many sectors and improved metrics across the credit spectrum,” said Rick Remiker, president, Huntington Equipment Finance. “A large part of this positive trend is due to an improving Midwest economy, formerly known as the ‘Rust Belt,’ and now being referred to as the ‘Recovery Belt.’ While all of this is good news for the industry, and near-term business trends remain positive, we remain cautious about global economic concerns dampening demand during the second half of the year.”