September 25, 2018 / 7:25 PM / in 2 months

U.S. business borrowing for equipment jumps 14 percent in August: ELFA

FILE PHOTO: Cranes and other construction equipment are seen towering over Las Vegas hotels at CONEXPO-CON/AGG convention at the Las Vegas Convention Center in Las Vegas, Nevada, U.S. March 9, 2017. REUTERS/David Becker

(Reuters) - Borrowing by U.S. companies to spend on capital investments rose 14 percent in August from a year earlier, a trade group representing capital equipment lenders said.

The companies signed up for $8.9 billion in new loans, leases and lines of credit last month, up from $7.8 billion a year earlier, the Equipment Leasing and Finance Association (ELFA) said.

“Fundamentals in the U.S. economy are favorable for capex investment by both large and small borrowers, and a number of asset classes and equipment verticals are benefiting,” ELFA Chief Executive Officer Ralph Petta said in a statement.

“Steadily rising interest rates, a spate of disagreements with our trading partners and a powerful hurricane have seemingly little, to no, effect on the U.S. economy and its continued vitality.”

Washington-based ELFA, which reports economic activity for the $1 trillion equipment finance sector, said credit approvals totaled 76.4 percent in August, up slightly from 76.2 percent in July.

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, BB&T Corp, CIT Group Inc and the financing affiliates or units of Caterpillar Inc, Deere & Co, Verizon Communications Inc, Siemens AG, Canon Inc and Volvo AB.

The Equipment Leasing & Finance Foundation, ELFA’s non-profit affiliate, said its confidence index for September is 65.5, up from the August index of 60.7. A reading of above 50 indicates a positive outlook.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Maju Samuel

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