A trade group for the lenders that finance half the capital equipment investment in the United States said on Monday that U.S. businesses remain hesitant about borrowing to invest in their operations.
The Equipment Leasing and Finance Association told Reuters that its capex financing index, which measures the overall volume of financings used to fund equipment acquisitions, fell to $4.3 billion in October, down 32.8 percent from last October and down 8.5 percent from September.
The group said the percentage of borrowers delinquent 30 days or more on their capex loans, leases or lines of credit rose to 4.2 percent last month, up from 3.6 percent last year but down from 5.6 percent in September.
Charge-offs as a percentage of all receivables rose to 1.7 percent in October, from 1.36 percent last year but down from 3.01 percent in September.
Credit approvals fell. Only 66.2 percent of applicants got the green light from lenders in October, down from 71.7 percent last year and 67.9 percent in September.
Ralph Petta, ELFA's interim president, highlighted the month-to-month improvement in charge-offs and delinquencies as a positive sign but acknowledged the industry was not out of the woods.
October's data is mixed, Petta said. While we are pleased that credit quality shows improvement, underlying demand for the product is still relatively weak.
The report, provided to Reuters a day ahead of its official release, came on the same day that the Federal Reserve Bank of Chicago released its three-month moving average index of national economic activity, which showed a decline for the first time in 2009.
The Fed's report, which came on the same day of a report showing a big jump in existing U.S. homes sales last month, was seen as a sign the current economic recovery may be a patchy affair.
ELFA's monthly report will be published officially on Tuesday.
ELFA's clients include Bank of America, Canon Financial Services, Caterpillar Financial Services Corp, CIT Group, Dell Financial Services, John Deere Credit Corp, Siemens Financial Services and Verizon Capital Corp.
More than half the money invested in plants, equipment and software in the United States in any given year is financed with loans, leases and lines of credit.
(Reporting by James B. Kelleher; editing by Carol Bishopric)