The equipment leasing and finance industry concluded 2024 with a strong performance, as indicated by the latest CapEx Finance Index. New business volumes surged, signaling an uptick in durable goods orders. The report also highlighted shifts in employment trends and credit approval rates within the sector. Despite some challenges, industry leaders express optimism for the coming year, citing resilient economic conditions and favorable financing opportunities.

Boost in Business Volumes and Financing Activity

In the final month of 2024, the equipment finance sector witnessed a notable increase in new business volumes. This growth was primarily driven by a significant surge in bank financing, which accounted for a substantial portion of the overall expansion. The rise in activity reflects growing confidence among businesses regarding future economic prospects.

The total new business volume (NBV) climbed to $11.4 billion in December, marking an 8.1% increase from November. Year-over-year, NBV expanded by 4.2%. The banking sector played a pivotal role in this growth, experiencing a remarkable 36.2% monthly jump. This unprecedented boost pushed bank financing's share to nearly 62% of total NBV, its highest level since the mid-2000s. Meanwhile, captive financiers saw a modest 0.2% rise, while independent financiers experienced a 5.3% decline. Industry experts attribute this trend to increased certainty following the election and stable interest rate expectations.

Employment Trends and Credit Conditions

While business volumes soared, employment in the equipment finance sector faced contraction. Over the past year, employment levels have declined by almost 2%. Banks and captives recorded decreases of 1.2% and 7.1%, respectively, whereas independents managed a slight 2.5% increase. These changes reflect broader economic adjustments and restructuring efforts within the industry.

Credit conditions remained healthy, with charge-offs dropping to 0.52% of net receivables, a welcome improvement after the previous month's spike. Aging receivables over 30 days edged up slightly to 2.0%, but still remain near two-year lows. The credit approval rate also showed signs of recovery, increasing to 74.3% in December. Notably, small-ticket financing approvals saw their largest one-month gain since March, rising by 3.6 percentage points. Industry insiders believe these positive indicators suggest that businesses are becoming more willing to invest in new equipment as they prepare for future growth projects.