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<< Rail News Home: Mechanical

7/25/2008    Finance

Rail News: Mechanical

Capital goods investment 'held its own' in the second quarter, survey says

Seeking a sliver of a silver lining, economically speaking? Here’s one: For the second quarter, Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index showed overall new business volume increased 3.2 percent compared with the same 2007 period.

ELFA’s index, which reports economic activity for the $650 billion equipment finance sector, also showed that equipment finance originations increased last month by 16.7 percent to $8.4 billion compared with May’s total. Meanwhile, survey respondents’ portfolio performance was mixed: Receivables in the less-than-30 day category were 97.1 percent in June, up nominally from the prior month. Conversely, charge-offs reached their highest point since January 2006 (0.88 percent) and are running nearly double the level experienced during the same month in 2007. Credit approval ratios (76.6 percent) increased 0.4 percentage points compared with May’s 76.2 percent. Total headcount for equipment finance companies has increased 1.4 percent since February, ELFA said.

“The June [index] indicates some softening in the equipment finance originations as compared to same period in 2007 and an uptick in charge offs,” said ELFA President Kenneth Bentsen Jr. in a prepared statement. “That said, the second quarter ended with originations up 3.2 percent year over year after a tepid first quarter, making the year-to-date flat. Delinquencies are holding steady and a slight increase in charge-offs notwithstanding, would indicate that investment in capital goods has at the very least held its own in an otherwise troubled economic environment.”

ELFA represents more than 700 financial services companies and manufacturers that finance the utilization of and investment in capital goods.

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