The Equipment Leasing and Finance Association’s (ELFA) monthly leasing and finance index, which reports economic activity from 25 companies representing a cross section of the $903 billion equipment finance sector, reported its overall new business volume for January was $6.7 billion, up 12% from new business volume in January 2014.
Volume was down 48% from December, following the typical end-of-quarter, end-of-year spike in new business activity, reported ELFA.
“To begin the year, equipment finance activity picked up where it left off for most of 2014,” said William G. Sutton, ELFA president and chief executive officer. “New business volume continues to grow and portfolios are performing well, despite a slight uptick in receivables over 30 days. Interest rates should remain low—at least into the spring and, perhaps, later—as the Fed keeps a close eye on prospects for inflation and the improving labor markets. As long as the U.S. economy continues to perform, and absent any geopolitical or other external shocks to the system, we are hopeful that these factors will help promote a favorable climate for continued investment by U.S. businesses in capital equipment in 2015 and beyond.”
Receivables over 30 days were 1.1%, up slightly from 1% the previous month and from 1% the same period in 2014. Charge-offs were unchanged for the tenth consecutive month at an all-time low of 0.2%.
Credit approvals totaled 78.6% in January, unchanged from December. Total headcount for equipment finance companies was up 1% year over year.
“The MLFI continues to provide encouraging data points indicating sustained growth and stability in our market,” added Robert Boyer, president, Susquehanna Commercial Finance Inc. “In January 2015, we at Susquehanna saw a hangover effect from December, when many of our customers rushed to take advantage of the late passing of the Tax Extenders bill. This had a negative impact on application volume in January, where our comps where lower than January 2014. Most of our customers at Susquehanna are small, domestic focused businesses where low rates and energy prices are driving higher levels of optimism. With the sustained growth and strong aging performance we continue to see, I am wary of the tendency to become complacent.”
Separately, the Equipment Leasing & Finance Foundation announced that its monthly confidence index for February is 66.3, a slight increase from the January index of 66.1 and the highest level in the last three years.
Find out more about the association at www.elfaonline.org.