New equipment leasing business up 13%

New business volumes for the equipment finance sector in February were 13% higher than the year before, suggesting 2015 is likely to see strong growth in the industry, according to the latest data from the Equipment Leasing and Finance Association (ELFA).

ELFA’s monthly leasing and finance index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the equipment finance sector, showed their overall new business volume for February was $6.1 billion, up 13% on new business volume in February 2014.

The index, which provides a barometer of the trends in US capital equipment investment, showed volume was down 9% from January. Year to date, cumulative new business volume increased 12% compared to 2014.

Receivables over 30 days were 1.1%, unchanged from the previous month and from the same period in 2014. Charge-offs remained at an all-time low of 0.2% for the 12th consecutive month.

ELFA president and CEO William G. Sutton said: “February’s new business growth reflects a US economy that seems to be on the verge of a breakout performance. Most metrics measuring economic health are positive, although the strong dollar is negatively impacting our export markets. Capex shows favorable growth, particularly in certain market sectors.”

However, Sutton sounded a note of caution, saying: “The wild card, of course, is US monetary policy, with the Fed poised to raise interest rates in the not-too-distant future. While higher interest rates typically favor the fixed-rate structure of most equipment finance transactions, it remains to be seen if volume growth can be sustained going forward.”