The Economy

Equipment Finance Data Point to More Growth

Trade group's monthly index shows new business volume has increased 10% year to date.
Matthew HellerJune 23, 2015

Cumulative new business volume for equipment finance companies has increased 10% so far this year compared to 2014, suggesting continued growth for the sector, the Equipment Leasing and Finance Association reports.

According to ELFA’s Monthly Leasing and Finance Index (MLFI-25), which tracks 25 companies across the sector, overall new business volume for May was $7.1 billion, up 1% from new business volume in May 2014 and down 13% from $8.2 billion in April 2015.

“Although members report strong activity in certain markets, some business owners continue to take a wait-and-see attitude before investing in new plant and equipment, as the Fed considers when to tighten monetary policy, which will lead to higher interest rates,” ELFA president and CEO William Sutton said Monday in a news release.

Nevertheless, he added, the double-digit increase in cumulative new business volume for the year “is indicative of the sector’s strength. Portfolios continue to perform well and member companies appear to be in a hiring mode, as headcount is up for the month.”

Credit approvals totaled 79.2% in May, up from 78.7 percent in April, and the total headcount for equipment finance companies was up 4.7% year over year.

Andrew Bender, CEO of GSG Financial, a provider of equipment financing solutions, said the data suggest “continued growth for the equipment leasing and finance industry. Charge offs and delinquency remain at historic lows and hiring in 2015 has been robust. Industry players are bullish and competition will remain tough, but these are all positive indicators as end users plan for year-end capital acquisitions.”

“Things could get interesting if the Fed impacts buying behavior across rate-sensitive sectors or if Congress extends bonus depreciation or enacts other tax reform,” Bender said. “With an eye on global economic disruptions, I am optimistic, but cautious.”

The MLFI-25 is released as a complementary economic indicator the day before the U.S. Department of Commerce releases the durable goods report.