ELFA's Monthly Leasing and Finance Index Highlights Growth
The Equipment Leasing and Finance Association (ELFA) published critical findings in its Monthly Leasing and Finance Index (MLFI-25), indicating that July has marked a notable period of growth within the equipment finance sector. This index surveys leading companies across the $1 trillion equipment finance market, painting a clearer picture of industry trends.
New Business Volume Experiences Significant Yearly Increase
In its report, ELFA disclosed that the new business volume (NBV) reached $11.1 billion, which represents a robust year-over-year increase of 13% compared to July of the previous year. The data also reflects a month-over-month rise of 11% from June 2024’s volume of $10 billion.
Cumulative Growth Indicators
Year-to-date figures reveal a cumulative NBV increase of 5.5% compared to the same period in 2023, showcasing continual strength in financing activities.
Analysis of Financial Health Metrics
Various other metrics from the report shed light on the financial health of the equipment finance sector:
- Receivables Stage: Receivables over 30 days increased to 2.5%, a rise from 2.0% the previous month, and also higher than the 2.3% reported in the same time frame last year.
- Charge-offs: The sector faces a charge-off growth of 0.5%, maintaining pace with previous month’s trends and reflecting an increase from 0.3% over the past year.
- Credit Approvals: An encouraging figure of 75.8% was noted in credit approvals, up from 75.0% in June, suggesting optimistic lending conditions.
- Workforce Development: The total workforce in equipment finance firms grew by 3% year-over-year, aligning with market expansion.
Confidence Index Reflects Positive Industry Sentiment
In parallel, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index has surged to 58.4, up from July’s value of 50.7. This indicates a significant uplift in sentiment among industry leaders, marking the highest level in over two years.
Industry Leaders’ Insights
Leigh Lytle, President and CEO of ELFA, commented on the findings: “Our July MLFI report showed strength in demand amidst financial conditions that have shown slight deterioration. Despite a slight slowing in bank activity, we are optimistic that credit quality improvements and growing demand for equipment will support sustainable growth moving forward.”
Positive Outlook for Equipment Finance Sector
Furthermore, Amrita Patel, Head of Equipment Finance at Wells Fargo, noted that the overall apparatus financing sector is resilient, citing strong demand pipelines as a harbinger for growth as companies navigate labor and borrowing costs effectively against equipment needs. She observed that potential rate cuts could also stimulate growth in equipment replacement and acquisitions, particularly among larger organizations capitalizing on their financial positions.
Understanding the MLFI-25
The MLFI-25 serves as a vital near-real-time index reflecting capital expenditures in the U.S. It is released monthly and acts as a complementary measure alongside other financial indicators, providing detailed insights into the market trends related to commercial equipment financing.
About the Equipment Leasing and Finance Association
The Equipment Leasing and Finance Association (ELFA) represents financial services companies and manufacturers in the vast U.S. equipment finance sector, consisting of over 575 member companies. ELFA plays a pivotal role in aiding businesses in securing the funding necessary for equipment acquisition, ultimately supporting economic growth and job creation.
Company Contact Information
For more information, media inquiries can be directed to Amy Vogt, Vice President of Communications and Marketing at ELFA, via email at avogt@elfaonline.org.
Frequently Asked Questions
What is the ELFA Monthly Leasing and Finance Index?
The MLFI-25 is an index that showcases economic activity across the equipment finance sector, capturing insights from 25 leading companies.
How much did the new business volume increase?
The new business volume reached $11.1 billion in July, reflecting a 13% increase compared to the same month last year.
What does an increase in receivables over 30 days indicate?
The rise in receivables over 30 days to 2.5% suggests a slight increase in lending risks or potential payment delays within the sector.
What is the significance of the Monthly Confidence Index?
The Monthly Confidence Index measures the sentiments of industry leaders, with a higher value indicating greater confidence in market conditions and future growth.
How does ELFA support the equipment finance industry?
ELFA advocates for financial services companies and provides resources, insights, and collective support for businesses in the equipment finance sector.
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