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Thursday, August 21, 2014

Capital Equipment Leasing, Financing Activity Shows Strength

There was good news in June for industrial equipment producers. The Equipment Leasing and Finance Association (ELFA) reports that its Monthly Leasing and Finance Index for June shows that the value of new equipment orders increased 15 percent from May and 8 percent from June 2012. Cumulative year-to-date new business volume is 10 percent higher than in 2012.

This means that capital-equipment suppliers, and customers that lease or finance their products, are doing more business, which is a sign that the manufacturing part of the economy is showing strength.

plant shotELFA charts the volume of capital equipment that is financed in the U.S. by comparing the economic activity of 25 representative member finance companies. Many regard the $725 billion equipment-finance industry as a barometer of economic health.

The data indicate continuing improvements. New business volume in June was $8.6 billion. Credit approvals, at 78.5 percent, were relatively unchanged from May. Receivables over 30 days were 1.4 percent, down from 1.6 percent in May, and at a historic low, according to ELFA. Delinquencies declined versus the same period in 2012, and charge-offs were unchanged at 0.3 percent, an all-time low for the fourth consecutive month.

Meanwhile, the Equipment Leasing & Finance Foundation, a nonprofit research organization related to ELFA, reports that its Monthly Confidence Index for July is 59.4, up 3.6 percent from June.

William G. Sutton, president and CEO of ELFA, which is based in Washington, D.C., says the data show that equipment leasing and financing continues to grow, and “the credit quality of these transactions remains at historic highs.” He adds that association members expect this trend to continue through the summer and beyond.


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