US business borrowing for equipment falls 2% in July - survey

The skyline is seen in Manhattan, New York City

(Reuters) - U.S. companies borrowed nearly 2% less in July than last year to finance equipment investments, an Equipment Leasing and Finance Association (ELFA) survey showed on Monday.

The companies signed up for new loans, leases, and lines of credit worth $9.9 billion last month, compared with $10.1 billion a year earlier, the industry body's survey said.

"In the current relatively high-interest rate environment in which the industry finds itself this summer, survey respondents are reporting some softness, coinciding with expectations by economists that overall investment in equipment and software will slow down in the second half of 2023," ELFA Chief Executive Ralph Petta said.

ELFA, which reports economic activity for the nearly $1-trillion equipment finance sector, said credit approvals totaled 75.3%, down from 76.1% in June.

Washington-based ELFA'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, Dell Technologies Inc, Siemens AG, Canon Inc and Volvo AB.

"Rising interest rate environments will slow consumer spending. Cheap money notes that begin to expire will be replaced by more expensive money, and new investments will be reduced," said Craig Ault, Honour Capital's chief revenue officer.

The Equipment Leasing & Finance Foundation, ELFA's non-profit affiliate, said its confidence index in August stood at 50.4, an increase from 46.4 in July. A reading above 50 indicates a positive business outlook.

(Reporting by Pratyush Thakur in Bengaluru; Editing by Maju Samuel)