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A survey of credit providers showed that loans and leases for business equipment in the U.S. rose 9.7% in March from a year ago, capping off a nearly 17% increase in financing activity during the first quarter.
Respondents to the Equipment Leasing and Finance Association's monthly survey said they financed $6.8 billion of new equipment last month, up from $6.2 billion in the year-earlier period. March's volume was up 36% from February and was the highest since September 2011. First-quarter volume totaled $16.9 billion, compared with $14.5 billion a year ago.
March's survey results support a continuation of spending on capital equipment, as companies replace worn-out or obsolete equipment after deferring such activity during the U.S. economic recession in 2008 and the subsequent sluggish recovery. But year-over-year growth is likely to moderate as the survey faces tougher year-ago comparison figures and volume eases during the summer months ahead.
"Increases of the magnitude we have experienced during the past two to three years in a recovery mode are probably not sustainable," said William Sutton, president of the Washington-based trade association. "Nevertheless, a 10% rate of growth for [March] continues a positive trend by businesses to make capex investments."
Credit portfolio quality measured by the survey improved from a year ago and was mostly stable on a month-to-month basis. Loans and leases past due by more than 30 days fell to 2.8% of survey respondents' net receivables in March, down from 3.5% a year earlier and up slightly from 2.5% in March.
Meanwhile, charge-offs amounted to 0.7% of respondents' net receivables last month, down from 1.3% a year ago and up from 0.5% in February. The approval rate for loans and leases was 78.4% in March, up from 75.4% a year ago and down slightly from 78.8% in February. Survey respondents continued to cite construction and trucking as the industry sectors within their loan portfolios that are underperforming.
A monthly confidence index of the U.S. capital-equipment finance industry rose to 62.7 in April from 61.7 in March.
The 25 respondents to the association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB), as well as 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; email@example.com