US Capital-Equipment Loans, Leases Up 3.2% In November ? Survey

U.S. Capital-Equipment Loans, Leases Up 3.2% In November ? Survey

By Bob Tita

A survey of credit providers indicates?loans?and leases for business equipment in the U.S. rose 3.2% in November from a year earlier, but decelerated rapidly from October, as buyers paused before the traditional year-end shopping spree.

Respondents to the Equipment Leasing and Finance Association?s monthly survey published Thursday said they financed $ 6.4 billion of new equipment last month, up from $6.2 billion in the year-earlier period. November?s volume was down 15.8% from October.

Sales and orders growth at several capital equipment companies eased in November, reflecting buyers? doubts about the strength of the U.S. economy, limited visibility about end-market conditions and anxiety about the so-called fiscal cliff that could result in significantly higher taxes and cuts in government spending.

Diversified industrial manufacturer Emerson Electric Co. (?EMR?) reported Thursday that its orders for the three months ended in November were flat from a year ago, but slightly better from the October period.

Meanwhile, construction equipment maker Caterpillar Inc. (?CAT?), a participant in the leasing and finance association?s survey, said Thursday that North America dealer sales during the three months ended in November rose 3% from a year- earlier, following a 13% increase during the October period.

?We are hopeful that as recent fiscal-cliff negotiations enter a decisive phase, that businesses will interpret this as a sign that the economy gradually will pick up steam,? William Sutton, president of the Washington-based finance association, said in a written statement. ?Only with a confident business sector will the equipment finance marketplace thrive and expand, as?investment?spending strengthens going forward.?

Spending on equipment has consistently grown faster than the broader U.S. economy, as companies replace worn-out or obsolete materials after having deferred such activity during the 2008 recession and the subsequent sluggish recovery. Since the beginning of 2012, financing volume is up 15.3% to $72.2 billion.

Financing is likely to surge in December from November as companies rush to complete 2012 capital spending programs before the end of the year. December is typically the biggest month of the year for financing activity.

Credit-portfolio quality measured by the survey was mixed in November. Loans and leases past due by more than 30 days accounted for 2% of survey respondents? net receivables in November, same as in November 2011, but up from 1.7% in October. On a month-to-month basis, past-dues fell for six straight months before November.

Charge-offs amounted to 0.5% of respondents? net receivables last month, down from 0.7% a year earlier, but up from 0.4% in October. The approval rate for loan and lease applications was 77% in November, compared with 76.2% a year earlier and 79.5% in October. Survey respondents continued to cite construction, printing and trucking as industry sectors within their loan?portfolios?that are underperforming.

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).

A separate monthly confidence index from the Equipment Leasing and Finance Foundation showed sentiment in the U.S. capital-equipment finance industry dropped to 48.5 in December compared with 49.9 in November, indicating the finance industry?s anxiety about the potential effects of the fiscal cliff.

Write to Bob Tita at robert.tita@dowjones.com

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Source: http://www.worldleasingnews.com/news/u-s-capital-equipment-loans-leases-up-3-2-in-november-survey/

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