US business equipment borrowings grow 4% in August – ELFA

The skyline is seen in Manhattan, New York City, US, August 21, 2021. REUTERS/Andrew Kelly

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Sept 23 (Reuters) – US companies borrowed 4% more in August to finance their investments in equipment compared to a year earlier, industry body ELFA said on Friday, while raising doubts over the sustainability of this growth amid slowdown fears.

The companies signed up for $8.8 billion in new loans, leases and lines of credit last month, compared with $8.5 billion a year earlier, according to the Equipment Leasing and Finance Association (ELFA). Borrowings were up 5% from January.

“With the Fed’s most recent 75-basis-point jump in short-term interest rates, and the prospect of a hard landing, time will tell whether — and to what extent — these same business owners continue to grow and invest in equipment,” ELFA Chief Executive Ralph Petta said in a statement.

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ELFA, which reports economic activity for the nearly $1-trillion equipment finance sector, said credit approvals totaled 75.2%, down from 78% in July.

The Washington-based body’s leasing and finance index measures the volume of commercial equipment financed in the United States.

The index is based on a survey of 25 members, including Bank of America Corp, and financing affiliates or units of Caterpillar Inc (CAT.N), Dell Technologies Inc (DELL.N), Siemens AG, Canon Inc and Volvo AB (VOLVb .ST).

The Equipment Leasing & Finance Foundation, ELFA’s non-profit affiliate, said its confidence index in September stood at 48.7%, compared with 50% in August. A reading above 50 indicates a positive business outlook.

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Reporting by Kannaki Deka in Bengaluru; Editing by Vinay Dwivedi

Our Standards: The Thomson Reuters Trust Principles.

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