Business volume in the equipment finance sector picked up in the final month of 2019, and the year ended with cumulative new business volume 4% higher than in 2017, according to data from the Equipment Leasing and Finance Association’s (ELFA’s) monthly leasing and finance index (MLFI-25).
The index, which reports economic activity from 25 companies representing a cross-section of sectors, showed their overall new business volume for December was $12.7 billion, down 1% compared to the same month in 2017. Volume was up 59% month-to-month from $8 billion in November in what the association described as a typical end-of-year spike.
In December, receivables over 30 days were 1.7%, up from 1.6% the previous month and up from 1.5% the same period in 2017. Charge-offs were 0.55%, up from 0.37% the previous month, and up from 0.48% in the year-earlier period.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in January is 53.4, down from the December index of 55.5.
Ralph Petta, ELFA president and CEO, said: “December new business volume capped off a very good year for the equipment leasing and finance industry. Solid demand, an abundant supply of funding in the credit markets, and quality portfolios all contributed to an extremely healthy equipment finance sector in 2018.
“Notably, MLFI-25 respondents indicated that credit approvals were at an all-time high in December, reflecting members’ willingness to provide the necessary financing to thousands of American businesses as they take advantage of a benign economy to acquire equipment to grow and expand their operations.”
However, Petta issued a warning over the potential changes ahead for the year, with most economists expecting a lower-growth scenario in 2019, as a result of trade policy frictions, rising interest rates, and the disruption caused by the recent government shutdown.
He said: “Whether these and other potential headwinds act as a brake on continued growth in the equipment finance sector over the next 12 months remains to be seen.”
Jud Snyder, president of BMO Harris Equipment Finance Company and ELFA chairman, said: “Looking forward, the primary issues we hear about from our clients revolve around global trade uncertainty and a lack of skilled labor availability. Despite those concerns, we see continued business optimism and investment in automation and capital equipment expansion throughout the early stages of 2019.”