Survey: US Capital-Equipment Financing Surges In November

Financing volume for business equipment rose 38% in November from a year earlier, according to a new survey, as capital spending in the U.S. demonstrates the breakout growth that has mostly been missing since the end of the recession in 2009.

Respondents to the Equipment Leasing and Finance Association's monthly survey said they financed $6.2 billion of new equipment in the U.S. last month, compared with $4.5 billion in the year-earlier period. November's volume was 3% higher than October's. December's volume will likely be higher than November, as companies rush to complete budgeted purchases of equipment before the end of the year.

From January through November, survey respondents provided financing for $63.2 billion of equipment purchases, up 25.7% from the same period in 2010. The recovery in the $628 billion-a-year commercial leasing and financing industry from its 2009 doldrums continues to regain momentum after activity plunged in July and August.

Concerns about an economic recession in Europe and slowing economic growth in China so far haven't squeezed capital spending in the U.S. A monthly confidence index of the U.S. capital equipment finance industry remained mostly unchanged at 57.2 in December, compared with 57.4 in November.

"Virtually all the metrics in this month's [survey] point to an industry poised for a breakout performance," said William Sutton, president of the Washington-based association. "While the replacement cycle appears to account for the sharp increase in new business volume, anecdotal and other evidence provided by ELFA members indicates that growth and credit quality continue to gain steam."

Credit-quality measured by the survey continued to improve last month. Loans and leases past due by more than 30 days amounted to 2% of survey respondents' net receivables in November, down from 3.2% a year earlier and down from 2.2% in October. Loan charge-offs amounted to 0.7% of respondents' net receivables last month, unchanged from October and down from 1.3% in November 2010.

Credit standards remained steady as the approval rate for loans and leases was 76.2% in November, compared with 76.3% in October. Of the companies participating in the survey, 65.5% reported that they submitted more transactions for approval during November, up from 59% in October.

Survey respondents continued to cite construction, trucking and printing as the industry sectors within their loan portfolios that are underperforming.

The 25 respondents to the Washington association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB); independent financing companies including CIT Group Inc. (CIT); and finance units for manufacturers Caterpillar Inc. (CAT), Deere & Co. (DE), Volvo Group and Dell Inc. (DELL).

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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