The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25) reported that overall new business volume for August was $8.8 billion, up 4% year-over-year from new business volume in August 2021. Volume was down 13% from $10.1 billion in July. Year-to-date cumulative new business volume was up 5% compared to 2021.

Receivables over 30 days were 1.5%, down from 1.6% the previous month and down from 1.8% in the same period in 2021. Charge-offs were 0.17%, down from 0.18% the previous month and down from 0.23% in the year-earlier period. Credit approvals totaled 75.2 %, down from 78 % in July, with the total headcount for equipment finance companies going down 2.9 % year-over-year.

Separately, the ELFA’s Monthly Confidence Index (MCI-EFI) in September is 48.7, a decrease from 50 in August.

“August origination volume reflects an equipment finance industry that is fueling continued growth and expansion of businesses throughout the U.S. Up to this point at least, steadily rising interest rates do not appear to dampen enthusiasm of businesses that prefer the utilization of productive assets versus their ownership, which is the essence of the equipment finance sector,” Ralph Petta, President and CEO of the ELFA, said. “With the Fed’s most recent 75-basis point jump in short-term interest rates, and the prospect of a hard landing, time will tell whether—and to what extent—these same business owners continue to grow and invest in equipment.”

“While the economic data may be construed in any number of ways and can feel, at times, unsettling, the fundamentals of our equipment finance business remain strong. Companies invest in capital equipment, throughout all cycles, for a myriad of reasons and equipment obsolescence is certainly real.” Thomas Sbordone, managing director and national sales manager, BMO Harris Equipment Finance, said. “Productivity gains require capital and business owners are always seeking an edge on the competition. Once decision-makers get past the initial ‘sticker shock’ of seeing how their financing rates have climbed over the past year they make rational choices based on their individual circumstances. The August MLFI results look positive, generally, given the market environment with continued high inflation, supply chain issues and other challenges. It will be interesting to see the September end-of-quarter MLFI results when the effects of the Fed’s latest interest rate hike are clearer. A ‘wait and see’ approach never feels great, but we’re reminded that patience is a virtue.”