Growth in new business volumes suggests durable goods orders will contract by 3.8% in January, according to the Equipment Leasing and Finance Association.
Total new business volume (NBV) rose by $9.3 billion seasonally adjusted, a decline of 17.8% from December to January among surveyed ELFA member companies. NBV year-to-date contracted by 6.4% from 2023 to 2024 on a seasonally adjusted basis, and the year-over-year change declined by 10.6% on a non-seasonally adjusted basis. Charge-offs (losses) dropped to 0.46%, the second decline in as many months.
“The latest CFI release showed that equipment demand was pulled forward from January to December, which caused volumes to underperform last month. Much of the overall decline came from the banking sector, which had a stellar yearend and a soft start to 2025. I expect conditions to normalize going forward, but risks to the outlook linger,” Leigh Lytle, president and CEO at ELFA, said. “Global economic and political uncertainty remains elevated, which could weigh on equipment demand later this year as businesses decide to pause investment until tensions subside. As both aging receivables and charge-offs showed, the industry is well prepared for an extended period of uncertainty, or whatever else may be thrown its way in 2025.”
New business volume growth dropped. NBV growth experienced its largest one-month drop on record, falling by 17.8% from December to January. While the percentage decline was sharp, the dollar amount of new business was only at its lowest since March 2023. New activity at banks and captives both experienced a monthly drop of more than 30%, while financing at independents grew by almost 9%. The dollar amount of new business was still above its monthly average from January through November of 2024, while new activity at captives declined to its lowest level since January 2017.
Headcounts continue to decline. Employment in the equipment finance industry contracted for the third straight month, with the 12-month change dropping 3.5%. Employment at banks and captives continued to decline, while job gains at independents slowed.
Credit approvals jump. The average credit approval rate increased to 75.9% in January, up 1.6 percentage points, the largest increase since October 2023. The rates for banks, captives, and independents all rose.
Financial conditions remain healthy. Charge-offs dropped for the second consecutive month to 0.46%. The January decline brings the rate to just above levels experienced in the ten months prior to the November increase. Aging receivables over 30 days ticked up to 2.2% but remained low.
“Despite macro-economic and political uncertainty, we anticipate companies will still look for creative financing solutions,” Mitch Rice, CEO of Commercial Capital Company, said. “They’re seeking greater flexibility and simplified, frictionless processes to address their evolving needs. Recognizing this demand, the industry is undergoing a widespread focus on technological enhancement to deliver more efficient and effective solutions and services. We’re embracing this shift when it comes to process automation and utilizing artificial intelligence.”
Industry Confidence
The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, eased to 66.9 in February, as respondents grew slightly more pessimistic about conditions over the next four months.
