U.S. companies borrowed more in September than a year ago to finance new equipment, the most in any month since December, but global economic and policy uncertainties curbed spending, the Equipment Leasing and Finance Association said on Tuesday.
Companies took on $8.2 billion in loans, leases and lines of credit to fund equipment purchases in September, 16 percent more than $7.1 billion a year earlier and 19 percent above August' s $6.9 billion, the industry group said.
The September borrowing was the highest monthly amount since the $10.8 billion year-end jump in December 2011.
The financing is used to buy goods such as industrial equipment, computer systems and office furniture.
While September's borrowing rise is "encouraging," most borrowing is used to replace aging equipment rather than for expansion, William Sutton, the group's chief executive, said in an interview.
"The run-up to the U.S. elections, high energy prices and continuing uncertainty brought about by fragile European economies is muting what might be an otherwise robust recovery for the U.S. economy," he said.
ELFA said that for the first eight months of the year, borrowing rose 16 percent from the comparable period in 2011.
"But we really need 3 percent or above in GDP to see growth in employment or any significant growth in our industry, to have potential for expansion versus replacement," Sutton said.
Second-quarter U.S. gross domestic product grew at an annual rate of 1.3 percent, the slowest since the third quarter of 2011, the Commerce Department reported in September.
The group has more than 550 members and reports economic activity for the $628 billion equipment finance sector.
Overall, credit quality measures were narrowly mixed in September, ELFA reported.
The percentage of borrowers that were late by more than 30 days on their debts fell for the fourth straight month, declining to 1.8 percent in September from 1.9 percent the prior month, the group said. The September rate is 22 percent lower than a year earlier.
Charge-offs, which reflect loans unlikely to be repaid, rose slightly to 0.5 percent in September from 0.4 percent in August, but were down 44 percent from September 2011.
Credit approvals rose to 79.6 percent in September from 77.0 percent in August.
ELFA's monthly index is based on a survey of 25 member organizations, including Bank of America Corp (BAC.N) and the financing affiliates or subsidiaries of Canon Inc (7751.T), Caterpillar Inc (CAT.N), Dell Inc DELL.O, Siemens AG (SIEGn.DE) and Verizon Communications Inc (VZ.N).
Separately, the Equipment Leasing & Finance Foundation, ELFA's non-profit affiliate, said its sentiment index was little changed at 53.3 in October from 53.0 in September. It remained below the recent peak of 62.1 in April.
(Reporting By Lynn Adler in New York. Editing by Andre Grenon)