New business volume in equipment finance surged year over year in May.
But the growth may slow in the coming months, Equipment Leasing and Finance Association President and CEO Leigh Lytle said in a June 26 release.
“We’ll be monitoring whether the effect of higher [interest] rates over the summer and into the fall will further delay equipment investments, which would be a headwind to economic activity through the second half of the year,” Lytle said.
ELFA Monthly Leasing and Finance Index
- New business volume landed at $10.2 billion, up 11% YoY, but dropped 7% from April; and
- Cumulative new business volume rose 6% YoY, totaling $47.8 billion.
Some of the increase may have come from construction equipment, due to infrastructure initiatives by the government, Kit West, business development director at Wheatland, Wyo.-based equipment financier C.H. Brown, told Equipment Finance News.
“New business seems to be flourishing for anyone who wants to build a brick-and-mortar type building,” he said.
The month-to-month inconsistency is normal but may also relate to the aftermath of the 2022 trucking boom, West said.
“I don’t think we’ve had a consistent month for the last six months,” he said. “The over-the-road trucks have been going through a rocky time. I think it’s leveling out.”
Credit approvals and charge-offs remained unchanged from April, and employment headcount rose 1.5% YoY.
Charge-offs landed at 0.4%, a slight increase from last year’s 0.3%.
While it depends heavily on the industry, West said there’s still employment growth.
“We’re still hiring lots of people, so we seem to be doing good in certain sectors and not so good in other sectors,” he said.
Equipment Leasing and Finance Foundation Index
Industrywide confidence remained steady in June, with the index at 50.2:
- 11.5% of executives said they believe business conditions will improve in the next four months;
- 25.9% of executives said they will hire more employees in the next four months; and
- 25.8% of executives said they believe U.S. economic conditions will get better over the next six months.
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