US Capital-Equipment Financing Up 9.7% In March - Survey
April 23 2012 - 3:30PM
Dow Jones News
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;
robert.tita@dowjones.com
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