The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $518 billion equipment finance sector, showed overall new business volume for May increased 5 percent when compared to the same period in 2009. When compared to the prior month, the MLFI-25 reported new business volume decreased by six percent, from $4.7 billion to $4.4 billion. Only 28 percent of the MLFI participants reported a year-over-year decline in new business volume in May 2010.
Delinquencies increased slightly from the previous month, but showed significant improvement compared to the year-earlier period. Charge-offs also improved, from 1.7 percent in May 2009 to 1.6 percent in May 2010.
Credit approvals remained flat at 68 percent when compared to the prior month, but were up slightly compared to the same period the prior year. Total headcount for equipment finance companies remained flat in the April-May period, but showed a significant drop from May 2009.
According to a CFO Survey conducted by Duke University, respondents forecasted stronger capital spending in the next 12 months. According to the survey, hiring and borrowing conditions continue to remain tight in the near future.
A related index, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI), for June was at 65.0, down from the May 2010 index of 67.4.
"While new business volume was somewhat sluggish early in the year, we are seeing a significant increase in pipeline activity during the second quarter,” said Larry Smilie, managing director, Banc of America Leasing. “Overall, we continue to see 2010 as a challenging year which for us will require disciplined origination and increased market coverage to overcome weaker than expected demand."
“Despite a modest growth spurt in new business volume in May, the data reflect what most economists recognize: a slowly recovering economy and somewhat soft demand by business for capital equipment,” said William G. Sutton, ELFA president. “But the trend appears to be heading in the right direction.”
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 9 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 latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at http://www.elfaonline.org/ind/research/MLFI/.
MLFI-25 Methodology
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.
ELFA MLFI-25 Participants
ADP Credit Corporation
Bank of America
Bank of the West
Canon Financial Services
Caterpillar Financial Services Corporation
CIT
De Lage Landen Financial Services
Dell Financial Services
Fifth Third Bank
First American Equipment Finance
GreatAmerica
Hitachi Credit America
HP Financial Services
John Deere Credit Corporation
Key Equipment Finance
Marlin Leasing Corporation
National City Commercial Corp.
RBS Asset Finance
Regions Equipment Finance
Siemens Financial Services
Susquehanna Commercial Finance, Inc.
US Bancorp
Tygris Vendor Finance
Verizon Capital Corp
Volvo Financial Services
Wells Fargo Equipment Finance
About the ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the $518 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its over 600 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers.