June 25, 2018 / 7:04 PM / 6 months ago

U.S. business borrowing for equipment flat in May: ELFA

(Reuters) - U.S. companies’ borrowing to spend on capital investment was little changed in May from a year earlier, the Equipment Leasing and Finance Association (ELFA) said.

Companies signed up for $7.7 billion in new loans, leases and lines of credit last month. However, borrowing fell 3 percent from $7.9 billion in April.

“Business confidence and slowly rising interest rates appear to be serving as stimulus to increased demand for equipment,” ELFA Chief Executive Ralph Petta said in a statement.

“So long as fundamentals in the U.S. economy remain strong, we expect this demand cycle to continue into and beyond the summer months this year. The one wild card that could derail this benign scenario is tariff frictions with our trading partners across our contiguous borders, the EU and China.”

Washington-based ELFA, a trade association that reports economic activity for the $1 trillion equipment finance sector, said credit approvals totaled 76.8 percent in May, up from 76.2 percent in April.

ELFA’s leasing and finance index measures the volume of commercial equipment financed in the United States. It is designed to complement the U.S. Commerce Department’s durable goods orders report, which it typically precedes by a few days.

ELFA’s index is based on a survey of 25 members that include Bank of America Corp (BAC.N), BB&T Corp (BBT.N), CIT Group Inc (CIT.N) and the financing affiliates or units of Caterpillar Inc (CAT.N), Deere & Co (DE.N), Verizon Communications Inc (VZ.N), Siemens AG (SIEGn.DE), Canon Inc (7751.T) and Volvo AB (VOLVb.ST).

The Equipment Leasing & Finance Foundation, ELFA’s non-profit affiliate, said its confidence index for June was 66.2, up from 64.6 in May. A reading of above 50 indicates a positive outlook.

Reporting by Shravanth Vijayakumar in Bengaluru

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