Receivables over 30 days decreased to 2.7 percent in April, down from 2.8 percent in March, and down by 18 percent compared to the same period in 2011. Charge-offs decreased to 0.6 percent, down from 0.7 percent the previous month, and down by 25 percent compared to the same period last year.
Credit approvals decreased to 76 percent in April from 78 percent in March. 76 percent of participating organizations reported submitting more transactions for approval during April, up from 67 percent in March.
Finally, total headcount for equipment finance companies in April increased 0.7 percent from the previous month, and was down 4.1 percent year over year. Supplemental data show that the construction and trucking industries continued to lead the underperforming sectors.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for May is 59.2, down slightly from the April index of 62.1, reflecting uncertainty about the pace of U.S. economic growth and concerns about global political and economic factors. For more detailed information on the MCI-EFI, visit www.LeaseFoundation.org
ELFA President and CEO William G. Sutton, CAE, said: “April’s new business volume and credit quality metrics appear to provide evidence that the equipment finance sector continues to gain momentum. Recent anecdotal information from ELFA members gathering in Washington, D.C., for a series of leadership meetings in mid-May supports the observation that the demand cycle for capital equipment parallels the broader economy in that both continue to strengthen, albeit slowly.”
Judson M. Snyder, President of BMO Harris Equipment Finance Company, headquartered in Milwaukee, WI, said: “We are seeing strong demand for financing in the transportation and energy sectors beginning in the end of 2011 and continuing through April of 2012. Many of these companies postponed replacing equipment during the financial crisis and are faced with the choice of increasing maintenance costs on older equipment or purchasing new. The ongoing historically low interest rate environment has made today an attractive time to replace and finance that equipment. We are also beginning to see requests for equipment relating to expansion and new contracts in the general manufacturing sector. These types of projects are a sign of a firmer economic recovery and we are hopeful that they will continue to develop throughout the summer and fall of 2012.”
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.
The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants is available below and also at http://www.elfaonline.org/Research/MLFI/
The ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 measures monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector, including small ticket, middle-market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector and current business conditions nationally