Economic activity for the $628 billion equipment finance sector showed that new business volume for August was $6.9 billion, up 21% from the same period in 2011, according to the Equipment Leasing and Finance Assn.'s (ELFA) Monthly Leasing and Finance Index. August volume was up 5% from July, and year-to-date cumulative new business volume increased 16%.
"The pace of new equipment financing continued throughout the summer months as the housing sector, for one, showed signs of a rebound," said William Sutton, ELFA's president and CEO. "However, businesses, both large and small, continue to build up cash reserves, indicating lingering apprehension over increasing energy prices, instability in the Arab world, and a still fragile Eurozone economy."
Thomas Depping, CEO of Ascentium Capital, said the credit quality of applications at his company remains uncharacteristically strong, with delinquencies at historic lows. "Although we have hedged ourselves against another possible global economic slowdown, we continue to expand our sales force as we have a generally optimistic view of our future," he said. "One thing I have learned over the past 30 years in the industry is that being over-capitalized and having substantial excess liquidity is never a bad thing."
Despite concerns over whether companies will expand their businesses in the face of economic and political uncertainty, September's confidence index actually shows increased optimism, according to a separate report from the Equipment Leasing and Finance Foundation. September's Monthly Confidence Index was 53.0, up from August's 50.2.
"The industry is performing well and new businesses are entering the segment to join the positive experience our asset class enjoys," said survey respondent Anthony Cracchiolo, president and CEO, vendor services, U.S. Bank Equipment Finance. "However, the growth of our industry is tightly aligned with the overall U.S. economy, and our industry's future will be determined by the broader actions of the U.S. economy."
