ELFF: Confidence highest in three years

Overall new business volume for January was $6.7 billion, up 12% from new business volume in January 2014, according to the The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25).

The index reports economic activity from 25 companies representing a cross section of the $903 billion equipment finance sector. January volume was down 48% from December, following the typical end-of-quarter, end-of-year spike in new business activity.

Receivables over 30 days were 1.1%, up slightly from 1% the previous month and from 1% the same period in 2014. Charge-offs were unchanged for the tenth consecutive month at an all-time low of 0.2%.

Credit approvals totaled 78.6% in January, unchanged from December. Total headcount for equipment finance companies was up 1% year over year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for February is 66.3, a slight increase from the January index of 66.1 and the highest level in the last three years.

When asked about the outlook for the future, MCI-EFI survey respondent William Verhelle, CEO, First American Equipment Finance, a City National Bank Company, said, “The economy continues to improve. First American is seeing increased equipment acquisition activity among the large corporate borrowers we serve. We are more optimistic about the U.S. economy today than we have been at any time during the past six years.”

ELFA president and CEO William G. Sutton, CAE, said: “To begin the year, equipment finance activity picked up where it left off for most of 2014. New business volume continues to grow and portfolios are performing well, despite a slight uptick in receivables over 30 days. Interest rates should remain low—at least into the spring and, perhaps, later—as the Fed keeps a close eye on prospects for inflation and the improving labor markets. As long as the U.S. economy continues to perform, and absent any geopolitical or other external shocks to the system, we are hopeful that these factors will help promote a favorable climate for continued investment by U.S. businesses in capital equipment in 2015 and beyond.”

● When asked to assess their business conditions over the next four months, 30.3% of executives responding said they believe business conditions will improve over the next four months, up from 23.3% in January. 63.6% of respondents believe business conditions will remain the same over the next four months, down from 76.7% in January. 6.1% believe business conditions will worsen, up from none who believed so the previous month.

● 42.4% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 20% in January. 51.5% believe demand will “remain the same” during the same four-month time period, down from 80% the previous month. 6.1% believe demand will decline, up from none in January.

● 27.3% of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 33.3% in January. 72.7% of survey respondents indicate they expect the “same” access to capital to fund business, up from 66.7% in January. None expect “less” access to capital, unchanged from the previous month.

● When asked, 39.4% of the executives reported they expect to hire more employees over the next four months, a decrease from 50% in January. 57.6% expect no change in headcount over the next four months, up from 50% last month. 3% expect to hire fewer employees, up from none who expected fewer in January.

● 6.1% of the leadership evaluate the current U.S. economy as “excellent,” up from 3% last month. 90.9% of the leadership evaluate the current U.S. economy as “fair,” down from 97% in January. 3% rate it as “poor,” up from none the previous month.

● 45.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 43.3% who believed so in January. 54.6% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 56.7% in January. None believe economic conditions in the U.S. will worsen over the next six months, unchanged from last month.

● In February, 48.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 50% in January. 51.5% believe there will be “no change” in business development spending, an increase from 50% last month. None believe there will be a decrease in spending, unchanged from last month.