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November 27, 2019 1:00 PM, EST

ELFA: October Equipment Financing and Leasing Up 14%

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An index that measures equipment financing and leasing trends showed business activity in October up 14% year-over-year.

The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index showed new business volume for October was $10.1 billion. Volume was up 1% month-to-month from $10 billion in September. Year to date, cumulative new business volume was up 6% compared with 2018, the association reported.

The index reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector.

Ralph Petta, CEO of ELFA

Petta

Ralph Petta, CEO of ELFA, said new business volume was the result of solid fundamentals in the U.S. economy.

“These data, coupled with anecdotal information gathered from members across multiple industry sectors at ELFA’s annual convention … reflect the broader equipment-finance industry continuing to fire on most, if not all, cylinders,” he said in a written statement.

But Petta added that he has some concern about slightly elevated charge-off and delinquency data. “This bears monitoring as the year comes to a close,” he said.

One reason that equipment financing and leasing may be solid is that U.S. retail sales have remained strong, according to Don Ake, vice president of commercial vehicles for FTR, a transportation-intelligence company based in Bloomington, Ind. That is helping new trucks make their way into the marketplace, meeting a consistent demand, despite economic uncertainty, Ake told Transport Topics.

Don Ake

Ake

Given some economic uncertainty, it’s not surprising to Ake that leasing is strong. In times of economic uncertainty, leasing is preferred to buying, he said. For 2020, Ake expects truck orders for the first quarter to be good, but the jury is out for all of 2020.

“No one really wants to commit for all of 2020 right now,” he said. “I don’t think we have seen big orders for 2020 yet.”

But ELFA officials said they believe U.S. economic growth will hold up for all of the coming year.

“With predictions that economic growth will hold up through year-end, and an uptick in the monthly confidence index, we should expect business sentiment and investment to continue to spur positive trends for the industry,” Robert Neagle, president of merchant finance for Ascentium Capital, said in a written statement.

The association said credit approvals totaled 76.3% unchanged from September.

The ELFA Monthly Leasing and Finance Index is a barometer of trends in U.S. capital equipment investment, according to the association. Five components make up the survey: new business volume, aging of receivables, charge-offs, credit approval ratios and headcount for the equipment finance business.

ELFA is a trade association that represents companies in the nearly $1 trillion equipment-finance sector, which includes financial service companies and manufacturers. ELFA has 575 members including banks, manufacturers and service providers.

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