ELFA’s Monthly Leasing & Finance Index Shows Originations Up 13% Year Over Year

WASHINGTON (Aug. 23, 2024) — The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), a survey of economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, reports that in July:
•    New business volume (NBV) was $11.1 billion, up 13% from July 2023.
•    Month over month, NBV was up 11% from $10 billion in June 2024.
•    Year to date, cumulative NBV was up 5.5% compared to 2023.

Additional findings include:
•    Receivables over 30 days were 2.5%, up from 2.0% the previous month and up from 2.3% in the same period in 2023.
•    Charge-offs grew by 0.5%, a similar rate as in the previous month, and were up from 0.3% over the last 12 months.
•    Credit approvals totaled 75.8%, up from 75.0% in June.
•    Total head count for equipment finance companies was up 3% year over year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index in August is 58.4, up from the July index of 50.7, and the highest level in more than two years.

ELFA President and CEO Leigh Lytle said, “Our July MLFI report showed strength in demand amidst a slight deterioration in financial conditions. Originations grew by double digits from June, but bank activity slowed. Given that banks comprise more than half of equipment finance activity, their continued pullback and the ability of captives and independents to pick up the slack bears watching in future surveys. Credit quality deteriorated, with both receivables and losses up year over year. Overall our latest report reflects optimism from industry leaders that equipment demand should remain healthy over the second half of the year as the Fed begins to ease monetary policy.”

Amrita Patel, head of equipment finance at Wells Fargo, said, “The equipment finance sector continues to exhibit strength, with demand in the pipelines indicating growth appetite into 2025. Potential rate cuts in September could contribute to this uptick, particularly for equipment replacement and acquisition. While smaller firms cautiously consider labor and borrowing costs against equipment needs, larger companies are progressing through capital expenditure cycles and at times, leveraging their cash in this environment.”

About ELFA’s MLFI-25
The MLFI-25 is the only near-real-time index that reflects capex, or the volume of commercial equipment financed in the U.S. It is released monthly from Washington, D.C., one day before the U.S. Department of Commerce’s durable goods report. This financial indicator complements reports like the Institute for Supply Management Index, providing a comprehensive view of productive assets in the U.S. economy — equipment produced, acquired and financed. The MLFI-25 consists of two years of business activity data from 25 participating companies. For more details, including methodology and participants, visit elfaonline.org/knowledge-hub/mlfi.