Positive outlook for equipment finance in Q4 2014

The outlook for the equipment finance industry for the final quarter of the year is positive according to data from the ELFA, which suggests both business volumes and industry confidence are on an upwards curve, although there are concerns about a possible weakening in the US economy.

ELFA’s Monthly Leasing and Finance Index (MLFI-25) shows overall new business volume for the companies it tracks totalled $9.4 billion in September, up 21% from new business volume in September 2013. Month over month, new business volume was up 31% from August, while the year to date cumulative new business volume increased 8% compared to 2013.

Charge-offs were unchanged for the sixth consecutive month at an all-time low of 0.2% while credit approvals remained largely unchanged at 79.7%.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for October stands at 60.4, slightly better than the September index of 60.2, with survey participants indicating increasing or consistent demand tempered by US economic concerns.

Fewer respondents (23%) now expect business conditions to improve over the next four months, down from 36.4% in September. Three quarters believe business conditions will remain the same, up from 60.6% in September, while the number who think business conditions will worsen remains at 3%.

A quarter (25.7%) of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, down from 30.3% in September, while more (71.4%) believe demand will “remain the same”, up from 66.7% the previous month.

ELFA president and CEO William G. Sutton, said: “All performance metrics for September indicate a favorable environment for business investment. Strong originations and solid portfolio performance, together with a slight uptick in hiring, all point to a robust equipment finance sector as we move into the final quarter of the year. We will keep our eye on these positive indicators as the US economy continues to react to geopolitical events, a worrisome global economic outlook and volatile US equity markets.”