Storm Clouds: June Monthly Leasing and Finance Index Drops 7% YoY

The Monthly Leasing and Finance 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 June was $9.1 billion, down 7 percent year-over-year from new business volume in June 2017. 

Volume was up 18 percent month-to-month from $7.7 billion in May. Year to date, cumulative new business volume was up 4 percent compared to 2017.

Receivables over 30 days were 1.40 percent, down from 1.60 percent the previous month and up from 1.30 percent the same period in 2017. Charge-offs were 0.33 percent, up from 0.31 percent the previous month, and down from 0.38 percent in the year-earlier period.

Credit approvals totaled 75.8 percent in June, down from 76.8 percent in May. Total headcount for equipment finance companies was down 0.2 percent year over year. During 2017, headcount was elevated due to acquisition activity at an MLFI reporting company.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in July is 62.8, easing from the June index of 66.2.

ELFA President and CEO Ralph Petta said, “Most sectors of the equipment finance industry are performing well, as the economy’s underlying fundamentals continue to hold up in the face of slowly rising interest rates. A strong corporate earnings season and continued strength in the labor markets create a positive environment for capex spending. Hopefully, potential disruption in the global supply chain created by frictions with our trading partners does not upend this positive scenario.”

Kris Snow, President, Cisco Capital, said, “The overall equipment financing industry activity has been strong during the first six months of 2018. In the technology sector, customers continue to shift their buying behaviors toward pay-per-use models, cloud-based models and bundled solutions that may include hardware, software and services. As a result, we expect captive finance companies to grow in importance as a strategic underpinning for business and economic growth throughout the remainder of the year.”

About the ELFA’s MLFI-25

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.

More at: www.elfaonline.org/Data/MLFI/

 

Category: General Update, News