Leasing industry index declines slightly from June, but up close to 9% year to date

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 July was $9.9 billion, up 9 percent year-over-year from new business volume in July 2020. Volume was down 5 percent month-to-month from $10.4 billion in June. Year-to-date, cumulative new business volume was up nearly 9 percent compared to 2020.

Receivables over 30 days were 1.9 percent, up from 1.8 percent the previous month and down from 2.4 percent in the same period in 2020. Charge-offs were 0.18 percent, down from 0.22 percent the previous month and down from 0.73 percent in the year-earlier period. Credit approvals totaled 76.5 percent, down from 76.7 percent in June. Total headcount for equipment finance companies was down 13.9 percent 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 August is 66.6, a decrease from the July index of 72.9.

ELFA President and CEO Ralph Petta said, “Despite supply chain disruptions in some sectors of the economy, signs of inflation, and emergence of the Delta coronavirus, July new business volume in the equipment finance industry is strong. Consumer spending is picking up, equity markets continue to advance, and unemployment is slowing—reasons to be optimistic about equipment investment and industry performance for the second half of the year.”

Jill McKean-Bilby, President, BOK Financial Equipment Finance, Inc., said, “2021 continues to be interesting. Demand for equipment remains high, which is resulting in higher equipment costs. Customers are ordering equipment from OEMs with very long lead times, with the delivery times of some orders unknown. The interest rate environment still remains low. Cash has been one of our main competitors this year, due to companies still having additional resources due to PPP loans. However, we have been able to continue to grow and remain steady with organic growth.”

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 time series that reflects two years of business activity for the 25 companies currently participating in the survey.